Question: Refer to the financial statements of Urban

> Four transactions are listed below. a. Sold goods to customers on credit. b. Collected amounts due from customers. c. Purchased supplies on account. d. Used supplies in operations of the business. Required: Prepare three columns labeled assets, liabilit

> Listed below are the ledger accounts for Borges Inc. at December 31, 2019. All accounts have normal balances. Service Revenue $23,150 Dividends $ 1,500 Cash 12,850 Salaries Expense 4,300 Accounts Payable 2,825 Equipment 12,725 Common

> Susan Eel wants to sell you her wholesale fish store. She shows you a balance sheet with total assets of $150,000 and total liabilities of $20,000. According to the income statement, last year’s net income was $40,000. When examining the accounting recor

> After much consideration, Cam and Anna decide to organize their company as a corporation. On January 1, 2019, Front Row Entertainment Inc. begins operations. Due to Cam’s family connections in the entertainment industry, Cam assumes the major responsibil

> What information is included in the heading of each of the four financial statements?

> Ehrlich Smith, the owner of The Shoe Box, has asked you to help him understand the proper way to account for certain accounting items as he prepares his 2019 financial statements. Smith has provided the following information and observations: a. A 3-year

> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. Determine the amounts in the accounting equation for the year ending December 31, 2016,

> Obtain General Electric’s 2016 annual report either through the ‘‘Investor Relations’’ portion of its website (do a web search for GE investor relations) or go to www.sec.gov and click ‘‘Company Filings Search’’ under ‘‘Filings.’’ Required: 1. Determine

> Kathryn Goldsmith is the chief accountant for Clean Sweep, a national carpet-cleaning service with a December fiscal year-end. As Kathryn was preparing the 2019 financial statements for Clean Sweep, she noticed several odd transactions in the general led

> You have the following data for Cable Company’s accounts receivable and accounts payable for 2019: Accounts receivable, 1/1/2019............................ $ 6,325 2019 Sales on credit............................................. 93,680 Accounts receiv

> Five common accounting practices are listed below: a. A customer pays $20 to mail a package on December 30. The delivery company recognizes revenue when the package is delivered in January. b. Jim Trotter owns C&S Heating Company. In preparing the financ

> Six statements are given below: a. The two fundamental qualitative characteristics that information should possess are __________ and __________. b. __________ is the characteristic that allows external users to identify similarities and differences betw

> Listed below are selected T-accounts and their beginning balances for Galle Inc.  Cash    Accounts Receivable      12,000     6,300                                            .        

> Galle Inc. entered into the following transactions during January. a. January 1: Borrowed $50,000 from First Street Bank by signing a note payable. b. January 4: Purchased $25,000 of equipment for cash. c. January 6: Paid $500 to landlord for rent for Ja

> Refer to the accounts listed below. a. Accounts Receivable b. Accounts Payable c. Cash d. Equipment e. Notes Payable f. Rent Expense g. Salaries Expense h. Service Revenue Required: For each of the accounts, indicate the normal balance of the account an

> Write the fundamental accounting equation. Why is it significant?

> Galle Inc. entered into the following transactions during January. a. Borrowed $50,000 from First Street Bank by signing a note payable. b. Purchased $25,000 of equipment for cash. c. Paid $500 to landlord for rent for January. d. Performed services for

> Several events are listed below. a. Paid $30,000 for land. b. Purchased office supplies for cash. c. Performed consulting services for a client with the amount to be collected in 30 days. d. Signed a contract to perform consulting services over the next

> The following trial balance that was prepared by the bookkeeper of Mason Company does not balance. Required: Prepare a correct trial balance. Assume all accounts have normal balances. Mason Company Trial Balance December 31, 2019 Debit Credit Cash $2

> At the beginning of 2019, KJ Corporation had total assets of $525,700, total liabilities of $290,800, common stock of $100,000, and retained earnings of $134,900. During 2019, KJ had net income of $205,500, paid dividends of $70,000, and issued additiona

> Leno Corporation reported the following amounts for assets and liabilities at the beginning and end of a recent year. Required: Calculate Leno’s net income or net loss for the year in each of the following independent situations: 1. Len

> Data from the financial statements of four different companies are presented in separate columns in the table below. Each column has one or more data items missing. Required: Use your understanding of the relationships among the financial statement items

> McDonald Marina provides docking and cleaning services for pleasure boats at its marina in southern Florida. The following account balances are available: Accounts payable $ 26,400 Interest expense $ 236,000 Accounts receivable 268,700 I

> The table below presents the retained earnings statements for Dillsboro Corporation for 3 successive years. Certain numbers are missing. Required: Use your understanding of the relationship between successive retained earnings statements to calculate the

> Magical Experiences Vacation Company has the following data available: Dividends, 2019 $ 14,000 Retained earnings, 12/31/2018 $ 55,300 Dividends, 2020 16,000 Revenues, 2019 221,900 Expenses, 2019 188,500 Revenues, 2020 325,400 Expenses, 20

> Ross Airport Auto Service provides parking and minor repair service at the local airport while customers are away on business or pleasure trips. The following account balances (except for retained earnings) are available for Ross Airport Auto Service at

> What is point-in-time measurement? How does it differ from period-of-time measurement?

> Define accounting. How does accounting differ from bookkeeping?

> Procter & Gamble is a $77 billion company that sells products that are part of most of our daily lives, including Mr. Clean, Cheer, Crest, Vicks, Scope, Pringles, Folgers, Vidal Sassoon, Zest, and Charmin. The annual report for P&G contained the followin

> The stockholders’ equity section on the December 31, 2011, balance sheet of American Corporation follows: Required: Complete the following statements and show your computations. 1. The number of shares of preferred stock issued was

> Complete the following requirements for each independent case. Case A: The charter for Rogers, Incorporated, authorized the following capital stock: Common stock, par $10, 103,000 shares Preferred stock, 9 percent, par value $8 per share, 4,000 shares Th

> A recent annual report for Halliburton Company contained the following information (in millions of dollars): In the current year, Halliburton declared and paid cash dividends of $1 per share. What would be the total amount of dividends declared and pai

> 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 stability, many retired peopl

> Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C). Required: 1. A few years ago, American Eagle Outfitters split its stock. Describe the impact that the splitwould have on the market value of the stock co

> Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book. Required: 1. How many shares of common stock are authorized at the end of the current year? How many shares are issued and outstanding at the end of the c

> Refer to the financial statements of American Eagle Outfitters given in Appendix B at the end of this book. Required: 1. Does the company have any treasury stock? If so, how much? 2. Does the company pay dividends? If so, how much per share? 3. Did the

> Granderson Company was granted a charter that authorized the following capital stock: Common stock: 100,000 shares, par value per share is $40 Preferred stock: 8 percent; par $5; 20,000 shares During the first year, 2011, the following selected transac

> At December 31, 2011, the records of Duo Corporation provided the following selected and incomplete data: Common stock (par $1; no changes during the year). Shares authorized, 5,000,000. Shares issued, ? ; issue price $80 per share. Shares

> Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Most companies report some amounts of bonds payable on their balance sheets. It is some

> Carlton Company had the following stock outstanding and retained earnings at December 31, 2011: Common stock (par $1; outstanding, 500,000 shares) ...............$500,000 Preferred stock, 8% (par $10; outstanding, 21,000 shares) ...........210,000 Retai

> Whole Foods Market, Inc., is the world’s leading natural and organic foods supermarket. The company is based in Austin, Texas, and conducts business through various wholly-owned subsidiaries. The followinginformation was contained in th

> Luther Company obtained a charter from the state in January 2011 which authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $429,000, and the following selected transactions occurred in the order given: a.

> Differentiate between callable and convertible bonds.

> What is the difference between the stated interest rate and the effective-interest rate on a bond?

> At the date of issuance, bonds are recorded at their current cash equivalent amount. Explain.

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

> Differentiate secured bonds from unsecured bonds.

> What is the difference between a bond indenture and a bond certificate?

> What are the primary characteristics of a bond? For what purposes are bonds usually issued?

> Explain the basic difference between the straight-line and the effective-interest methods of amortizing a bond discount or premium. Explain when each method should or may be used.

> What is the book value of a bond payable?

> Differentiate among the stated and effective rates of interest on a bond (a) sold at par, (b) sold at a discount, and (c) sold at a premium.

> Explain the nature of the discount and premium on bonds payable.

> As the tax rate increases, the net cost of borrowing money decreases. Explain.

> Determine whether each of the following would be reported in the financing activities section of the statement of cash flows and, if so, specify whether it is a cash inflow or outflow. 1. Sale of bonds at a discount. 2. Payment of interest on a bond. 3.

> McDermott International is an engineering and construction company with significant oil and gas operations. The annual report for McDermott contains the following note: The company used cash on hand to purchase the entire $200 million in aggregate princi

> On January 1, 2011, Antonio Company issued $700,000 in bonds that mature in 10 years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 10 per

> On January 1, 2011, Cunningham Corporation issued $200,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 6 percent and pay interest on December 31. When the bonds were sold, the market rate of interest was 8 percent. The comp

> Akron Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2011 Maturity amount and date: $100,000 due in 10 years Interest: 10 percent per annum payable each June 30 and December 31 Date

> AMC Entertainment, Inc., owns and operates 243 movie theaters with 1,617 screens in 22 states. The company sold 11 7/8 percent bonds in the amount of $52,720,000 and used the cash proceeds to retire bonds with a coupon rate of 13.6 percent. At that time,

> Barnett Corporation sold a $500,000, 7 percent bond issue on January 1, 2011. The bonds pay interest each June 30 and December 31 and mature 10 years from January 1, 2011. For comparative study and analysis, assume three separate cases. Use straight-line

> On January 1, 2011, Nowell Company issued $300,000 in bonds that mature in five years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 8 per

> Arbor Corporation’s financial statements for 2011 showed the following: Income Statement Revenues .................................................................$300,000 Expenses ......................................................

> DirectTV is the largest provider of direct-to-home digital television services and the second largest provider in the multichannel video programming distribution industry in the United States. It provides over 16 million subscribers with access to hundre

> MBTA Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2011. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The following schedu

> Commonwealth Company issued bonds with the following provisions: Maturity value: $300,000 Interest: 11 percent per annum payable annually each December 31 Terms: Bonds dated January 1, 2011, due five years from that date The annual accounting period en

> On January 1, 2011, Cron Corporation issued $700,000 in bonds that mature in five years. The bonds have a stated interest rate of 13 percent and pay interest on June 30 and December 31 each year. Whenthe bonds were sold, the market rate of interest was 1

> On January 1, 2011, Vigeland Corporation issued $2,000,000 in bonds that mature in 10 years. The bonds havea stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. When the bondswere sold, the market rate of interest wa

> Electrolux Corporation manufactures electrical test equipment. The company’s board of directors authorizeda bond issue on January 1, 2011, with the following terms: Maturity (par) value: $800,000 Interest: 8 percent per annum payable each December 31 Mat

> On January 1, 2011, TCU Utilities issued $1,000,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 12 p

> On January 1, 2011, Thomas Insurance Corporation issued $4,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 9 percent and pay interest on December 31 each year. When the bonds were sold, the market rate of interest was

> A bond with a maturity value of $100,000 has a stated interest rate of 8 percent. The bond matures in 10 years. When the bond is issued, the market rate of interest is 10 percent. What amount should be reported when the bond is issued? a. $100,000 b. $8

> Which of the following is not an advantage of issuing bonds when compared to issuing additionalshares of stock in order to obtain additional capital? a. Stockholders maintain proportionate ownership percentages. b. Interest expense reduces taxable income

> Annual interest expense for a single bond issue continues to increase over the life of the bonds. Which of the following explains this? a. The market rate of interest has increased since the bonds were sold. b. The coupon rate of interest has increased s

> When using the effective-interest method of amortization, the book value of the bonds changes by what amount on each interest payment date? a. Interest expense b. Cash interest payment c. Amortization d. None of the above

> A bond with a face value of $100,000 is sold on January 1. The bond has a stated interest rate of 10 percent and matures in 10 years. When the bond was issued the market rate of interest was 10 percent. On December 31, the market rate of interest increas

> When using the effective-interest method of amortization, interest expense reported in the income statement is impacted by the a. Par value of the bonds. b. Coupon rate of interest stated in the bond certificate. c. Market rate of interest on the date th

> To determine whether a bond will be sold at a premium, discount, or at face value, one must know which of the following pairs of information? a. Par value and the coupon rate on the date the bond was issued. b. Par value and the market rate on the date t

> A bond with a face value of $100,000 was issued for $93,500 on January 1, 2011. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold. Interestis paid annually. How much interest will be paid on D

> Which of the following is false when a bond is issued at a premium? a. The bond will issue for an amount above its par value. b. Bonds payable will be credited for the par value of the bond. c. Interest expense will exceed the cash interest payments. d.

> Which account would not be included in the debt-to-equity ratio calculation? a. Unearned Revenue. b. Retained Earnings. c. Income Taxes Payable. d. All of the above are included.

> On January 1, 2011, Grand Isle Corporation issued $900,000 in bonds that mature in five years. The bonds have a stated interest rate of 10 percent and pay interest on December 31 each year. When the bonds were sold, the market rate of interest was 9 perc

> For each of the following items, specify whether the information would be found in the balance sheet, the income statement, the statement of cash flows, the notes to the statements, or not at all. 1. The amount of a bond liability. 2. Interest expense fo

> In what section of the statement of cash flows would you find cash paid to retire bonds? In what section would you find cash paid for interest?

> If interest rates fell after the issuance of a bond and the company decided to retire the debt, would you expect the company to report a gain or loss on debt retirement? Describe the financial statement effects of a debt retirement under these circumstan

> Wefald Company issued $600,000, 10-year, 10 percent bonds on January 1, 2011. The bonds sold for $580,000. Interest is payable semiannually each June 30 and December 31. Record the sale of the bonds on January 1, 2011, and the payment of interest on June

> Coffman Company issued $1,000,000, 10-year, 10 percent bonds on January 1, 2011. The bonds sold for $940,000. Interest is payable semiannually each June 30 and December 31. Record the sale of the bonds on January 1, 2011, and the payment of interest on J

> Trew Company plans to issue $900,000, 10-year, 6 percent bonds. Interest is payable semiannually on June 30 and December 31. All of the bonds will be sold on January 1, 2011. Determine the issuance price of the bonds assuming a market yield of 8.5 percen

> Willams Company plans to issue $600,000, 10-year bonds that pay 8 percent payable semiannually on June 30 and December 31. All of the bonds will be sold on January 1, 2011. Determine the issuance priceof the bonds assuming a market yield of 8 percent.

> If a company issues a bond at a discount, will interest expense each period be more or less than the cash payment for interest? If another company issues a bond at a premium, will interest expense be more or less than the cash payment for interest? Is yo

> The debt-to-equity and times interest earned ratios were discussed in this chapter. Which is a better indicator of a company’s ability to meet its required interest payment? Explain.

> RKO Company issued $850,000, 10-year, 8 percent bonds on January 1, 2011. The bonds sold for $910,000. Interest is payable annually each December 31. Record the sale of the bonds on January 1, 2011, and the payment of interest on December 31, 2011, using

> On January 1, 2011, Avaya Corporation issued $2,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 6 percent and pay interest on December 31 each year. When the bonds were sold, the market rate of interest was 7 percent.

> Ernst Company issued $600,000, 10-year, 9 percent bonds on January 1, 2011. The bonds sold for $620,000. Interest is payable annually each December 31. Record the sale of the bonds on January 1, 2011, and the payment of interest on December 31, 2011, usi

> Waterhouse Company plans to issue $500,000, 10-year, 10 percent bonds. Interest is paid semiannually on June 30 and December 31. All of the bonds will be sold on January 1, 2011. Determine the issuance price of the bonds, assuming a market yield of 8 per

> What are some of the primary items on financial statements about which creditors usually are concerned?

> What is ratio analysis? Why is it useful?

> Why are statement users interested in financial summaries covering several years? What is the primary limitation of long-term summaries?

> What is the primary purpose of comparative financial statements?

> Why are the notes to the financial statements important to decision makers?