On May 4, 2010, Docker, Inc., purchased 800 shares of its own common stock in the market at a price of $18.25 per share. On September 19, 2010, 600 of these shares were sold in the open market at a price of $19.50 per share. There were 36,200 shares of Docker common stock outstanding prior to the May 4 purchase of treasury stock. A $0.35 per share cash dividend on the common stock was declared and paid on June 15, 2010. Required: Use the horizontal model (or write the entry) to show the effect on Docker’s financial statements of a. the purchase of the treasury stock on May 4. b. the declaration and payment of the cash dividend on June 15. c. the sale of the treasury stock on September 19.
> Jennifer Rankine is an accountant for a local manufacturing company. Jennifer’s good friend, Mike Bortolotto, has been operating a retail sporting goods store for about a year. The store has been moderately successful, and Mike needs a bank loan to help
> Assume that Cater Co.’s accountant neglected to record the payroll expense accrual adjustment at the end of October. Required: a. Explain the effect of this omission on net income reported for October. b. Explain the effect of this omission on net incom
> Precision Numbers, Inc., manufactures pocket calculators. Costs incurred in making 25,000 calculators in April included $85,000 of fixed manufacturing overhead. The total absorption cost per calculator was $12.50. Required: a. Calculate the variable cos
> Proco had an account payable of $16,800 due to Shirmoo, Inc., one of its suppliers. The amount was due to be paid on January 31. Proco did not have enough cash on hand then to pay the amount due, so Proco’s treasurer called Shirmoo’s treasurer and agreed
> On April 1, 2010, Tabor Co. received a $6,000 note from a customer in settlement of a $6,000 account receivable from that customer. The note bore interest at the rate of 15% per annum, and the note plus interest was payable March 31, 2011. Required: Use
> During the month of April, Simpson Co. had cash receipts from customers of $170,000. Expenses totaled $156,000, and accrual basis net income was $42,000. There were no gains or losses during the month. Required: a. Calculate the revenues for Simpson Co.
> Enter the following column headings across the top of a sheet of paper: Enter the transaction / situation letter in the first column and show the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or o
> Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the a
> Prepare an answer sheet with the column headings shown after the following list of transactions. Record the effect, if any, of the transaction entry or adjusting entry on the appropriate balance sheet category or on the income statement by entering the a
> Write the journal entry (ies) for each of the transactions of Exercise 4.2. Exercise 4.2: The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its first month of operations. Prepare an answer sheet with th
> Write the journal entry (ies) for each of the transactions of Exercise 4.1. Exercise 4.1: The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. Prepare an answer sheet with the columns shown. Rec
> The following are the transactions relating to the formation of Cardinal Mowing Services, Inc., and its first month of operations. Prepare an answer sheet with the columns shown. Record each transaction in the appropriate columns of your answer sheet. Sh
> Write a statement identifying the expectations you have for this course.
> Brent, Inc., manufactures wool sweaters. Costs incurred in making 55,000 sweaters in August included $330,000 of fixed manufacturing overhead. The total absorption cost per sweater was $38.60. Required: a. Calculate the variable cost per sweater. b. The
> The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. Prepare an answer sheet with the columns shown. Record each transaction in the appropriate columns of your answer sheet. Show the amounts invol
> This exercise provides practice in understanding the operation of T-accounts and transaction analysis. For each situation, you must solve for a missing amount. Use a T-account for the balance sheet account, show in a horizontal model, or prepare journal
> Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2010, financial statements: For the Year Ended December 31, 2010: Net revenues . . . . . . . . . . . . . . . . . . . . . .
> DeBauge Realtors, Inc., is a realty firm owned by Jeff and Kristi DeBauge. The DeBauge family owns 100% of the corporation’s stock. The following summarized data (in thousands) are taken from the December 31, 2010, financial statements: For the Year End
> Manyops, Inc., is a manufacturing firm that has experienced strong competition in its traditional business. Management is considering joining the trend to the “service economy” by eliminating its manufacturing operations and concentrating on providing sp
> Following are the current asset and current liability sections of the balance sheets for Cal ketch, Inc., at August 31, 2011 and 2010 (in millions): Required: a. Calculate the working capital and current ratio at each balance sheet date. Round your cur
> Annual reports provide significant information about an organization’s capital budget and capital budgeting process. Intel Corporation provides financial reports for several years at www.intel.com (About Intel → Investor Relations → Financials and Filing
> Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each acco
> Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each acco
> Prepare an answer sheet with the column headings shown here. For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on the appropriate balance sheet category and on net income by entering for each acco
> Staley Toy Co. makes toy flutes. Two manufacturing overhead application bases are used; some overhead is applied on the basis of machine hours at a rate of $7.50 per machine hour, and the balance of the overhead is applied at the rate of 200% of direct l
> For each of the following costs, check the columns that most likely apply (both variable and fixed might apply for some costs). Product Costs Direct Indirect Period Variable Fixed Raw materials Staples used to secure packed boxes of product Plant ja
> Following are a statement of cash flows (indirect method) for Harris, Inc., for the year ended December 31, 2011, and the firm’s balance sheet at December 31, 2010: HARRIS, INC. Statement of Cash Flows For the Year Ended December 31, 2011of Cash
> Refer to the consolidated statements of income on page 687 of the Intel Corporation annual report in the appendix. Required: a. Does Intel use the single-step format or the multiple-step format? Which format do you prefer? Explain your answer. b. Refer
> For each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the year ended December 31, 2010: a. Cash collected from customers during the year amounted to $365,000, and
> For each of the following items, calculate the cash sources or cash uses that should be recognized on the statement of cash flows for Baldin Co. for the year ended December 31, 2010: a. Sales on account (all are collectible) amounted to $760,000, and ac
> Thrifty Co. reported net income of $465,000 for its fiscal year ended January 31, 2011. At the beginning of that fiscal year, 200,000 shares of common stock were outstanding. On October 31, 2010, an additional 60,000 shares were issued. No other changes
> Ringemup, Inc., had net income of $473,400 for its fiscal year ended October 31, 2010. During the year the company had outstanding 38,000 shares of $4.50, $50 par value preferred stock, and 105,000 shares of common stock. Required: Calculate the basic e
> A partially completed balance sheet for Blue Co., Inc., as of January 31, 2011, follows. Where amounts are shown for various items, the amounts are correct. Required: Using the following data, complete the balance sheet. a. Blue Co.’s
> Refer to the selected financial data (five-year financial summary) on page 685 of the Intel Corporation annual report in the appendix. selected financial data: Required: Compare the trend of the operating income data with the trend of net income data
> If you were interested in evaluating the profitability of a company and could have only limited historical data, would you prefer to know operating income or net income for the past five years? Explain your answer.
> MBI, Inc., had sales of $141.6 million for fiscal 2010. The company’s gross profit ratio for that year was 31.6%. Required: a. Calculate the gross profit and cost of goods sold for MBI, Inc., for fiscal 2010. b. Assume that a new product is developed an
> Refer to the consolidated statements of income on page 687 of the Intel Corporation annual report in the appendix. consolidated statements: Required: a. Calculate the gross profit ratio for each of the past three years. b. Assume that Intelâ
> Assume that the ending inventory of a merchandising firm is overstated by $40,000. Required: a. By how much and in what direction (overstated or understated) will the firm’s cost of goods sold be misstated? b. If this error is not corrected, what effect
> If the ending inventory of a firm is overstated by $50,000, by how much and in what direction (overstated or understated) will the firm’s operating income be misstated? (Use the cost of goods sold model, enter hypothetically “correct” data, and then refl
> Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,2
> Big Blue University has a fiscal year that ends on June 30. The 2010 summer session of the university runs from June 9 through July 28. Total tuition paid by students for the summer session amounted to $112,000. Required: a. How much revenue should be
> Refer to the consolidated statements of cash flows on page 689 of the Intel Corporation annual report in the appendix. consolidated statements: Required: a. Identify the two most significant sources of cash from operating activities during 2008. How m
> Following are comparative statements of cash flows, as reported by The Coca-Cola Company in its 2008 annual report: Required: a. Briefly review the consolidated statements of cash flows, and then provide an overall evaluation of the “
> Kenisha Morgan owns and operates Morgan’s Furniture Emporium, Inc. The balance sheet totals for assets, liabilities, and owner’s equity at August 1, 2010, are as indicated. Described here are several transactions enter
> Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each financial statement category by entering a plus (+) or m
> Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each financial statement category by entering a plus (+) or m
> Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each financial statement category by entering a plus (+) or m
> Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each financial statement category by entering a plus (+) or m
> On January 1, 2010, Metco, Inc., had issued an outstanding 574,600 shares of $2 par value common stock. On March 15, 2010, Metco, Inc., purchased for its treasury 4,400 shares of its common stock at a price of $75 per share. On August 10, 2010, 1,400 of
> Permabilt Corp. was incorporated on January 1, 2010, and issued the following stock for cash: 3,600,000 shares of no-par common stock were authorized; 1,050,000 shares were issued on January 1, 2010, at $46 per share. 1,200,000 shares of $100 par value
> Homestead Oil Corp. was incorporated on January 1, 2010, and issued the following stock for cash: 800,000 shares of no-par common stock were authorized; 150,000 shares were issued on January 1, 2010, at $19 per share. 200,000 shares of $100 par value, 9
> Allyn, Inc., has the following owners’ equity section in its November 30, 2010, balance sheet: Paid-in capital: 12% preferred stock, $60 par value, 1,500 shares authorized, issued, and outstanding . . .. .. . . .. . . . . . .. . . .. . . . $ ? Common st
> Assume that you own 3,000 shares of Blueco, Inc.’s, common stock and that you currently receive cash dividends of $.42 per share per year. Required: a. If Blueco, Inc., declared a 5% stock dividend, how many shares of common stock would you receive as a
> Indicate the effect of each of the following transactions on total assets, total liabilities, and total owners’ equity. Use ï€«ï€ for increase, − for decrease, and (NE) for no effect. The
> Under what circumstances would you (as an investor) prefer to receive cash dividends rather than stock dividends? Under what circumstances would you prefer stock dividends to cash dividends?
> Blanker, Inc., has paid a regular quarterly cash dividend of $0.50 per share for several years. The common stock is publicly traded. On February 21 of the current year, Blanker’s board of directors declared the regular first-quarter dividend of $0.50 per
> Qamar, Inc., did not pay dividends in 2009 or 2010, even though 50,000 shares of its 6.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 800,000 shares of $2.50 par value common stock outstanding. Required
> Calculate the cash dividends required to be paid for each of the following preferred stock issues: Required: a. The semiannual dividend on 6% cumulative preferred, $50 par value, 30,000 shares authorized, issued, and outstanding. b. The annual dividend
> Calculate the annual cash dividends required to be paid for each of the following preferred stock issues: Required: a. $3.75 cumulative preferred, no par value; 200,000 shares authorized, 161,522 shares issued. (The treasury stock caption of the stockho
> The balance sheet caption for common stock is the following: Common stock without par value, 2,000,000 shares authorized, 400,000 shares issued, and 360,000 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . $2,600,000 Required: a. Calcul
> From the following data, calculate the Retained Earnings balance as of December 31, 2010: Retained earnings, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $490,400 Net decrease in total assets during 2011
> At the beginning of the current fiscal year, the balance sheet of Cummings Co. showed liabilities of $219,000. During the year, liabilities decreased by $36,000; assets increased by $77,000; and paid-in capital also increased by $10,000 to $190,000. Divi
> At the beginning of the current fiscal year, the balance sheet of Hughey, Inc., showed owners’ equity of $520,000. During the year, liabilities increased by $21,000 to $234,000; paid-in capital increased by $40,000 to $175,000; and asse
> Assume that you own 500 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $40. Required: a. How many shares of common stock will you own after the stock split? b. What will pro
> Circle-Square, Ltd., is in the process of liquidating and going out of business. The firm’s balance sheet shows $22,800 in cash, accounts receivable of $114,200, inventory totaling $61,400, plant and equipment of $265,000, and total liabilities of $305,6
> Find a list of common stock exdividend date data. (You can go, via Google, to stocks—wsj.com. Select the reference which is labeled Market Data Center; then select the stocks and trading statistics tab; then select the Dividends section. Scroll down unti
> Knight, Inc., expects to incur a loss for the current year. The chairperson of the board of directors wants to have a cash dividend so that the company’s record of having paid a dividend during every year of its existence will continue. What factors will
> Your conversation with Mr. Gerrard, which took place in February 2011 (see Case 6.28), continued as follows: Case 4.26: Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2
> The transactions affecting the owners’ equity accounts of DeZurik Corp. for the year ended June 30, 2011, are summarized here: 1. 320,000 shares of common stock were issued at $14.25 per share. 2. 80,000 shares of treasury (common) stock were sold for $
> For now you can ignore the 2011 column in the balance sheet; all disclosures presented here relate to the June 30, 2010, balance sheet.) DeZurik Corp. had the following owners’ equity section in its June 30, 2010, balance sheet (in thou
> On January 1, 2010, Learned, Inc., issued $60 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semiannually each June 30 and December 31 and mature on December 31, 2029. Required: a. Using
> On January 1, 2010, Drennen, Inc., issued $3 million face amount of 10-year, 14% stated rate bonds when market interest rates were 12%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2019. Required: a. Using th
> Riley Co. has outstanding $40 million face amount of 15% bonds that were issued on January 1, 1998, for $39,000,000. The 20-year bonds mature on December 31, 2017, and are callable at 102 (that is, they can be paid off at any time by paying the bondholde
> O’Kelley Co. has outstanding $2 million face amount of 12% bonds that were issued on January 1, 2002, for $2 million. The 20-year bonds were issued in $1,000 denominations and mature on December 31, 2021. Each $1,000 bond is convertible at the bondholder
> The following summary data for the payroll period ended December 27, 2009, are available for Cayman Coating Co.: Gross pay . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . $53,000 FICA tax withholdings . . . . . . .
> The following information was obtained from the records of Breanna, Inc.: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 10,000 Accumulated depreciation. . . . . . . . . . . . . . . . . .. . . . ... . 52,000 Cost of goods
> The following summary data for the payroll period ended on November 14, 2009, are available for Brac Construction Ltd.: Gross pay . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ? FICA tax withholdings . . .
> Evans Ltd. publishes a monthly newsletter for retail marketing managers and requires its subscribers to pay $50 in advance for a one-year subscription. During the month of September 2010, Evans Ltd. sold 200 one-year subscriptions and received payments i
> (Note: See Exercise 5.14 for the related prepaid expense accounting .) On November 1, 2010, Gordon Co. collected $25,200 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2011, at which
> Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the appropriate balance sheet category or on net income b
> Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustments on the appropriate balance sheet category or on th
> Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each of the transactions/adjustments on the appropriate balance sheet category or on the
> The difference between the amounts of book and tax depreciation expense, as well as the desire to report income tax expense that is related to book income before taxes, causes a long-term deferred income tax liability to be reported on the balance sheet.
> Atom Endeavour Co. issued $250 million face amount of 9% bonds when market interest rates were 8.92% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? b. Were the bonds issued at a
> Reynolds Co. issued $40 million face amount of 11% bonds when market interest rates were 11.14% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? b. Were the bonds issued at a premi
> On March 1, 2005, Matt purchased $63,000 of Lawson Co.’s 8%, 20-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates had risen to 12%, and Matt is considering selling the bo
> Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2010. Assume that all balance sheet items reflect account balances at December 31, 2010, and that all income statement items reflect activities that occurred dur
> On August 1, 2002, Bonnie purchased $15,000 of Huber Co.’s 10%, 20-year bonds at face value. Huber Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2010, market rates of interest had fallen to 8%, and Bonnie is considering se
> Coley Co. issued $30 million face amount of 9%, 10-year bonds on June 1, 2010. The bonds pay interest on an annual basis on May 31 each year. Required: a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would
> Kaye Co. issued $1 million face amount of 11%, 20-year bonds on April 1, 2010. The bonds pay interest on an annual basis on March 31 each year. Required: a. Assume that market interest rates were slightly lower than 11% when the bonds were sold. Would t
> Kirkland Theater sells season tickets for six events at a price of $252. For the 2010 season, 1,200 season tickets were sold. Required: a. Use the horizontal model (or write the journal entry) to show the effect of the sale of the season tickets. b. Use
> Cool froth Brewing Company distributes its products in an aluminum keg. Customers are charged a deposit of $50 per keg; deposits are recorded in the Keg Deposits account. Required: a. Where on the balance sheet will the Keg Deposits account be found? Ex
> Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2010. Based on an analysis of customer complaints made over the past two years, the cost of a warranty program was
> Karysa Co. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus tax bills for 2010 are issued in May 2011 and are payable in July 2011. Required: a. Explain how the amount of tax expense for calen
> At March 31, 2010, the end of the first year of operations at Jaryd, Inc., the firm’s accountant neglected to accrue payroll taxes of $4,800 that were applicable to payrolls for the year then ended. Required: a. Use the horizontal model (or write the jo
> On August 1, 2010, Colombo Co.’s treasurer signed a note promising to pay $240,000 on December 31, 2010. The proceeds of the note were $232,000. Required: a. Calculate the discount rate used by the lender. b. Calculate the effective interest rate (APR)
> On April 15, 2010, Powell, Inc., obtained a six-month working capital loan from its bank. The face amount of the note signed by the treasurer was $300,000. The interest rate charged by the bank was 9%. The bank made the loan on a discount basis. Require
> Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2010. Assume that all balance sheet items reflect account balances at December 31, 2010, and that all income statement items reflect activities that occurred
> Enter the following column headings across the top of a sheet of paper: Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the appropriate balance sheet category or on net income b
> Assume that Home and Office City, Inc., provided the following comparative data concerning long-term debt in the notes to its 2011 annual report (amounts in millions): Required: a. As indicated, Home and Office City’s 31â&
