Quick Fix-It Corporation was organized at the beginning of this year to operate several car repair businesses in a large metropolitan area. The charter issued by the state authorized the following stock: Common stock, $10 par value, 98,000 shares authorized Preferred stock, $50 par value, 8 percent, 59,000 shares authorized During January and February of this year, the following stock transactions were completed: a. Sold 78,000 shares of common stock at $20 cash per share. b. Sold 20,000 shares of preferred stock at $80 cash per share. c. Bought 4,000 shares of common stock from a current stockholder for $20 cash per share. Required: Net income for the year was $210,000; cash dividends declared and paid at year-end were $50,000. Prepare the stockholders’ equity section of the balance sheet at the end of the year.
> A recent annual report for Apple Inc. contained the following information (dollars in thousands): Stockholders’ Equity 2014 Common stock, $0.00001 par value,
> Audio House, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Ad
> Ingersol Construction Supply Company is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summari
> Differentiate between cumulative and noncumulative preferred stock.
> What are the usual characteristics of preferred stock?
> Identify and explain the three important dates with respect to dividends.
> Define stock split. How does a stock split differ from a stock dividend?
> Define stock dividend. How does a stock dividend differ from a cash dividend?
> What are the two basic requirements to support the declaration of a cash dividend? What are the effects of a cash dividend on assets and stockholders’ equity?
> How is treasury stock reported on the balance sheet? How is the “gain or loss” on the resale of treasury stock reported on the financial statements?
> Define treasury stock. Why do corporations acquire treasury stock?
> Assume that you are a financial analyst for a large investment banking firm. You are responsible for analyzing companies in the retail sales industry. You have just learned that a large West Coast retailer has acquired a large East Coast retail chain for
> Explain the difference between contributed capital and earned capital. How is each represented in the stockholders’ equity section of a company’s balance sheet?
> Define additional paid-in capital.
> Explain the distinction between par value and no-par value stock
> Differentiate between common stock and preferred stock.
> Explain each of the following terms: (a) authorized shares, (b) issued shares, and (c) outstanding shares.
> What is a corporate charter?
> Define the term corporation and identify the primary advantages of this form of business organization.
> On January 1, Biofuel Corporation had the following capital structure: Common stock ($0.10 par value) …………………&acir
> The following account balances were selected from the records of Cascade Company at the end of the fiscal year after all adjusting entries were completed: Common stock ($0.01 par value; 200,000 shares authorized, 54,000 shares issued, 52,0
> Heather and Scott, two young financial analysts, were reviewing financial statements for Google, one of the world’s largest technology companies. Scott noted that the company did not report any dividends in the financing activity section of the statement
> Assume that you are on the board of directors of a company that has decided to buy 80 percent of the outstanding stock of another company within the next three or four months. The discussions have convinced you that this company is an excellent investmen
> Chicago Company reported the following information at the end of the current year: Common stock ($8 par value; 35,000 shares outstanding)……………â€
> 1. Explain how a stock dividend differs from a cash dividend. 2. Explain how a large stock dividend differs from a small stock dividend. 3. Explain how reselling treasury stock for more than it was purchased affects the income statement and the statement
> United Resources Company obtained a charter from the state in January of this year. The charter authorized 200,000 shares of common stock with a par value of $1. During the year, the company earned $590,000. Also during the year, the following selected t
> The following was in the financial press pertaining to GoDaddy Incorporated: April 1, 2015—GoDaddy’s (GDDY) stock was sold for $26 per share during its opening day of trading. GoDaddy sold 23 million shares at its IPO. Required: 1. Record the issuance o
> King Corporation began operations in January of the current year. The charter authorized the following stock: Preferred stock: 10 percent, $10 par value, 40,000 shares authorized Common stock: $5 par value, 85,000 shares authorized During the current yea
> Witt Corporation received its charter during January of this year. The charter authorized the following stock: Preferred stock: 10 percent, $10 par value, 21,000 shares authorized Common stock: $8 par value, 50,000 shares authorized During the year, the
> At the end of the year, the records of NCIS Corporation provided the following selected and incomplete data: Common stock ($10 par value); no changes in account during the year. Shares authorized: 200,000. Shares issued: _____ (all shares were issued at
> Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $144,000. Expenses for the year were $164,000. Case A: Assume that the company is a sole proprietorship owned by Propriet
> To expand operations, Aragon Consulting issued 170,000 shares of previously unissued stock with a par value of $1. Investors purchased the stock for $21 per share. Record the sale of this stock. Would your journal entry be different if the par value was
> Carbide Corporation purchased 20,000 shares of its own stock from investors for $45 per share. The next year, the company resold 5,000 of the repurchased shares for $50 per share, and the following year it resold 10,000 of the repurchased shares for $37
> 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 types of securities are included in the short-term investments and the long-term in
> Weili Corporation has 80,000 shares of common stock outstanding with a par value of $8. Required: 1. Complete the table below for each of the two following independent cases: Case 1: The board of directors declared and issued a 40 percent stock dividend
> On July 1, Davidson Corporation had the following capital structure: Common stock ($1 par value) …………………â
> At the beginning of the year, the stockholders’ equity section of the balance sheet of Solutions Corporation reflected the following: Common stock ($12 par value; 65,000 shares authorized, 30,000 shares outstanding)……………………. $360,0
> A recent annual report for Nordstrom Inc. disclosed that the company declared and paid dividends on common stock in the amount of $1.20 per share. During the year, Nordstrom had 1,000,000,000 authorized shares of common stock and 191,200,000 issued share
> Service Corporation has the following capital stock outstanding at the end of the current year: Preferred stock, 6 percent, $15 par value, 8,000 outstanding shares Common stock, $8 par value, 30,000 outstanding shares On October 1 of the current year, th
> The records of Hollywood Company reflected the following balances in the stockholders’ equity accounts at the end of the current year: Common stock, $12 par value, 50,000 shares outstanding Preferred stock, 10 percent, $10 par value, 5,000 shares outstan
> Peters and Associates is a small manufacturer of electronic connections for local area networks. Consider the three cases below as independent situations. Case 1: Peters increases its cash dividend by 50 percent, but no other changes occur in the company
> During the year, the following selected transactions affecting stockholders’ equity occurred for Navajo Corporation: Required: 1. Provide the journal entries to record each of the transactions in (a) through (c). 2. What impact does th
> During the year the following selected transactions affecting stockholders’ equity occurred for Orlando Corporation: Required: 1. Provide the journal entries to record each of the transactions in (a) through (c). 2. Describe the impact
> The following account balances were selected from the records of TAC Corporation at the end of the fiscal year after all adjusting entries were completed: Common stock ($20 par value; 100,000 shares authorized, 34,000 shares issued, 32,000 shares outsta
> Use the data given in Alternate Problem 5 for Summer Corporation. Data given in Alternate Problem 5: The comparative financial statements for Prince Company are below: Required: 1. Compute component percentages for Year 2. 2. Compute the ratios in the
> Rock Bottom Gold Company recently repurchased 7 million shares of its common stock for $47 per share. The intent of the repurchase was to increase earnings per share to be more in line with competitors. Required: 1. Determine the impact of the stock rep
> Procter & Gamble has sales in excess of $83 billion and sells products that are part of most of our daily lives, including Crest, Duracell, Olay, Gillette, Tide, and Vicks. A recent annual report for P&G contained the following information: a. Retained e
> On-Line Learning Corporation obtained a charter at the beginning of this year that authorized 52,000 shares of no-par common stock and 23,000 shares of preferred stock, par value $10. The corporation was organized by four individuals who purchased a tota
> Below is select information from DC United Company’s income statement. At the end of Year 1, the weighted average number of common shares outstanding was 132,000. Income Statement, End of Year 1 Sales ………………..…….………………………$942,000 Cost of goods sold.…
> Ruth’s Chris Steakhouse is the largest upscale steakhouse company in the United States, based on total company- and franchisee-owned restaurants. The company’s menu features a broad selection of high quality USDA prime steaks and other premium offerings.
> Williamson Corporation was organized to operate a tax preparation business. The charter authorized the following stock: common stock, $2 par value, 80,000 shares authorized. During the first year, the following selected transactions were completed: a. So
> The stockholders’ equity section on the balance sheet of Dillard’s, a popular department store, is shown below. During the year, the company reported net income of $463,909,000 and declared and paid dividends of $10,00
> Tarrant Corporation was organized this year to operate a financial consulting business. The charter authorized the following stock: common stock, par value $10 per share, 11,500 shares authorized. During the year, the following selected transactions were
> The financial statements for Highland Corporation included the following selected information: Common stock ……………………………………..$1,600,000 Retained earnings …………………………………..$900,000 Net income……………………………………………$1,000,000 Shares issued………………………………………………90,000 S
> The comparative financial statements for Summer Corporation are below: Required: 1. Complete the following columns for each item in the preceding comparative financial statements: INCREASE (DECREASE) from Year 1 to Year 2 Amount Percent 2. By what am
> Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the following: Common stock, $10 par value, 103,000 shares authorized Preferred stock, 9 percent, par value $8 per share, 4,000 shares authorize
> Case 1: Matsumoto Training Academies is a sole proprietorship. To start the business, the owner, Mr. Tanaka, contributed $500,000 cash. During the year the owner withdrew $30,000 cash. Net income for the year was $45,000. Case 2: Galaxy Robotics is a par
> Pool Corporation, Inc., is the world’s largest wholesale distributor of swimming pool supplies and equipment. It is a publicly traded corporation that trades on the NASDAQ exchange under the symbol POOL. The majority of Pool’s customers are small, famil
> Answer the questions below. Treat each case as being independent from the other cases. Case A: The charter for Rogers, Incorporated, authorized the following stock: Common stock, $10 par value, 103,000 shares authorized Preferred stock, 9 percent, $8 par
> Evaluating an Ethical Dilemma You are a member of the board of directors of a large company that has been in business for more than 100 years. The company is proud of the fact that it has paid dividends every year it has been in business. Because of this
> 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. Calculate the dividend yield ratios for Urba
> Refer to the financial statements of Urban Outfitters in Appendix C at the end of this book Financial statements of Urban Outfitters: Required: 1. How many shares of common stock are authorized? How many are issued? How many are outstanding? 2. Did the
> 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. Does the company report treasury stock? If so, what dollar amount does it report? 2. Did
> Granderson Company was granted a charter on January 1 that authorized the following stock: Common stock: $40 par value, 100,000 shares authorized Preferred stock: 8 percent; $5 par value; 20,000 shares authorized During the year, the following transactio
> At the end of the year, the records of Duo Corporation provided the following selected and incomplete data: Common stock: $1,500,000 ($1 par value; no changes in account during the year). Shares authorized: 5,000,000. Shares issued: _____ (all shares wer
> Tabor Company has just prepared the following comparative annual financial statements for the current year: Required: 1. For the current year, compute the turnover, liquidity, and solvency ratios in Exhibit 13.3. Assume cash flows from operating activit
> Carlton Company reported the following information at the end of the year: Common stock ($1 par value; 500,000 shares outstanding) ……………â€&brvb
> Under the equity method, dividends received from the affiliate company are not recorded as revenue. To record dividends as revenue involves double counting. Explain.
> Under the equity method, why does the investor company measure revenue on a proportionate basis when income is reported by the affiliate company rather than when dividends are declared?
> Explain the application of the cost principle to the purchase of capital stock in another company.
> Explain the difference in accounting methods used for passive investments, investments in which the investor can exert significant influence, and investments in which the investor has control over another entity.
> Explain the difference between a short-term investment and a long-term investment.
> What is goodwill?
> Company A uses the FIFO method to account for inventory and Company B uses the LIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Costs of inventory items for both companies have been rising ste
> Use the data in Problem 5 for Prince Company. Assume that the stock price per share is $28 and that dividends in the amount of $3.50 per share were paid during Year 2. Compute the following ratios: · Earnings per share · Current ratio
> Use the data given in Problem 5 for Prince Company. Data from Problem 5: The comparative financial statements for Prince Company are below: Required: 1. Compute component percentages for Year 2. 2. Compute the ratios in the DuPont model for Year 2.
> Using the financial information presented in Exhibit 13.1, calculate the following ratios for The Home Depot: · Net profit margin · Earnings quality · Receivable turnover · Cash ratio ·
> The comparative financial statements for Prince Company are below: Required: 1. Complete the following columns for each item in the preceding comparative financial statements: INCREASE (DECREASE) from Year 1 to Year 2 Amount Percent 2. By what amoun
> The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth
> Using the financial information presented in Exhibit 13.1, calculate the following ratios for The Home Depot: · Return on equity · Return on assets · Total asset turnover · Inventory turnover · Current ratio · Quick ratio · Cash coverage ratio · Debt-to-
> You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have is below. Which company would you select? Justify your choice. Ratios for Current Year Company A Company B Industry Average Curre
> Company X and Company Y are two giants of the retail industry. Both offer full lines of moderately priced merchandise. In the last fiscal year, annual sales for Company X totaled $53 billion and annual sales for Company Y totaled $20 billion. Compare the
> What is ratio analysis? Why is it useful?
> What are the two general methods for making financial comparisons?
> How does product differentiation differ from cost differentiation?
> When considering an investment in stock, investors should evaluate the company’s future income and growth potential on the basis of what three factors?
> Who are the primary users of financial statements?
> The price/earnings ratio provides important information concerning the stock market’s assessment of the growth potential of a business. The following are price/earnings ratios for selected companies. Match the company with its ratio and
> A manufacturer reported an inventory turnover ratio of 8.6 during last year. This year, management introduced a new inventory control system that was expected to reduce average inventory levels by 25 percent without affecting sales. Given this estimate,
> A creditor is least likely to use what ratio when analyzing a company that has borrowed funds on a long-term basis? a. Cash coverage ratio. b. Debt-to-equity ratio. c. Times interest earned ratio. d. Dividend yield ratio.
> California Pizza Kitchen opened its first restaurant in Beverly Hills in 1985. Almost immediately after the first location opened, it expanded from California to more than 250 locations in more than 30 states and 11 countries. California Pizza Kitchen co
> A decrease in selling and administrative expenses would impact what ratio? a. Fixed asset turnover ratio. b. Times interest earned ratio. c. Debt-to-equity ratio. d. Current ratio.
> Given the following ratios for four companies, which company is least likely to experience problems paying its current liabilities promptly? Receivable Quick Ratio Turnover Ratio а. 1.2 58 b. 1.2 25 с. 1.0 55 d. .5 60
> The inventory turnover ratio for Natural Foods Stores is 14.6. The company reported cost of goods sold in the amount of $1,500,000 and total sales of $2,500,000. What is the average amount of inventory for Natural Foods? a. $102,740 c. $100,000 b. $
> A company has quick assets of $300,000 and current liabilities of $150,000. The company purchased $50,000 in inventory on credit. After the purchase, the quick ratio would be a. 2.0 c. 1.5 b. 2.3 d. 1.75
> Positive financial leverage indicates a. Positive cash flow from financing activities. b. A debt-to-equity ratio higher than 1. c. A rate of return on assets exceeding the interest rate on debt. d. A profit margin in one year exceeding the previous year’
> Positive financial leverage indicates a. Positive cash flow from financing activities. b. A debt-to-equity ratio higher than 1. c. A rate of return on assets exceeding the interest rate on debt. d. A profit margin in one year exceeding the previous year’
> Which of the following ratios is used to analyze liquidity? a. Earnings per share. c. Current ratio. b. Debt-to-equity ratio. d. Both (a) and (c).
> Which of the following would not change the receivables turnover ratio for a retail company? a. Increases in the retail prices of inventory. b. A change in credit policy. c. Increases in the cost incurred to purchase inventory. d. None of the above.
> A company has total assets of $500,000 and noncurrent assets of $400,000. Current liabilities are $40,000. What is the current ratio? a. 12.5 b. 10.0 c. 2.5 d. Cannot be determined without additional information.
