Question: The cost of merchandise sold reported on

> A company reports the following: Net income ………………………………………………… $ 375,000 Preferred dividends ………………………………………… 75,000 Average stockholders’ equity ………………………. 2,500,000 Average common stockholders’ equity …………. 1,875,000 Determine (a) The return on stock

> Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $28,000 and $18,000, respectively. After all noncash assets are sold and all liabilities are pai

> The statement of members’ equity for Bonanza, LLC, follows: a. What was the income-sharing ratio in 20Y3? b. What was the income-sharing ratio in 20Y4? c. How much cash did Thomas Dunn contribute to Bonanza, LLC, for his interest? d.

> Lane Stevens is to retire from the partnership of Stevens and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Lane Stevens, $150,000; Cherrie Ford, $70,000; a

> The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows: Dennis Overton ……………………………….. $180,000 Ben Testerman ………………………………….. 120,000 The following additional partner transactions

> L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $8,000. The capital balances of each p

> Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to ref

> Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and

> Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,000,000 shares of common stock with a par of $1. The following transactions affecting stockholders’ equity were c

> After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $45,000 and $60,000, respectively. Austin Neel is to be admitted to the partnership, contributing $30,000 cash t

> The capital accounts of Trent Henry and Tim Chou have balances of $160,000 and $100,000, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $35,000 and one-fourth of Chou’s

> Myles Etter and Crystal Santori are partners who share in the income equally and have capital balances of $210,000 and $62,500, respectively. Etter, with the consent of Santori, sells one-third of his interest to Lonnie Davis. What entry is required by t

> Breakin Away Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee: For the current pay period, the computer programmer worked 50 hours

> Emilio Alvarez and Graciela Zavala joined together to form a partnership. Is it possible for them to lose a greater amount than the amount of their investment in the partnership? Explain.

> What are the main advantages of (a) Proprietorships, (b) Partnerships, and (c) Limited liability companies?

> Why is it important to state all partnership assets in terms of current prices at the time of the admission of a new partner?

> Explain the difference between the admission of a new partner to a partnership (a) By purchase of an interest from another partner and (b) By contribution of assets to the partnership.

> a. What accounts are debited and credited to record a partner’s cash withdrawal in lieu of salary? b. The articles of partnership provide for a salary allowance of $6,000 per month to partner C. If C withdrew only $4,000 per month, would this affect the

> Josiah Barlow, Patty DuMont, and Owen Maholic are contemplating the formation of a partnership. According to the partnership agreement, Barlow is to invest $60,000 and devote one-half time, DuMont is to invest $40,000 and devote three-fourths time, and M

> On April 5, Fenning Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 30,000 shares of $80 par common stock valued at $112 per share. Journalize the entry to record the transaction.

> In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and Exchange Commission (SEC). It includes the company’s financia

> Marvin Turner was discussing summer employment with Tina Song, president of Motown Construction Service: Tina: I’m glad you’re thinking about joining us for the summer. We certainly can use the help. Marvin: Sounds good. I enjoy outdoor work, and I could

> Tonya Latirno is a staff accountant for Cannally and Kennedy, a local CPA firm. For the past 10 years, the firm has given employees a year-end bonus equal to two weeks’ salary. On November 15, the firm’s management team announced that there would be no a

> Reynolds American, Inc., has numerous pages dedicated to describing contingent liabilities in the notes to recent financial statements. These pages include extensive descriptions of multiple contingent liabilities. Use the Internet to research Reynolds A

> Nabors Company reported the following current assets and liabilities for December 31 for two recent years: a. Compute the quick ratio on December 31 of both years. b. Interpret the company’s quick ratio. Is the quick ratio improving o

> The annual examination of Felton Company’s financial statements by its external public accounting firm (auditors) is nearing completion. The following conversation took place between the controller of Felton Company (Francie) and the audit manager from t

> WBM Motorworks is a manufacturer of high-end touring and off-road motorcycles. On November 30, the company was sued by a customer who was injured when the front shock absorber on the WBM Series 3 motorcycle cracked during use. The company conducted a pre

> Payroll accounting involves the use of government-supplied forms to account for payroll taxes. Three common forms are the W-2, Form 940, and Form 941. Form a team with three of your classmates and retrieve copies of each of these forms. They may be obtai

> The following items were selected from among the transactions completed by Aston Martin Inc. during the current year: Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount. May 1. Purchased equipment by issuing a $320,00

> The following accounts, with the balances indicated, appear in the ledger of Codigo Co. on December 1 of the current year: The following transactions relating to payroll, payroll deductions, and payroll taxes occurred during December: Dec. 1. Issued Ch

> On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 1,000,000 shares of no-par common stock (with a stated value of $0.25) at $1.20, and on August 3, it issued for cash 10,000 shares of preferred stock, $15 par at $21. a. Journalize

> The following data for Flexco Inc. relate to the payroll for the week ended December 9, 20Y8: Employees Grove and Seaver are office staff, and all of the other employees are sales personnel. All sales personnel are paid 1½ times the regul

> Jocame Inc. began business on January 2, 20Y7. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of t

> The current assets and current liabilities for Apple Inc. and HP, Inc., are as follows at the end of a recent fiscal period: a. Determine the quick ratio for both companies. Round to one decimal place. b. Interpret the quick ratio difference between th

> Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years: a. Determine the quick ratio for December 31 of both years. b. Interpret the change in the quick ratio between the two balance sheet dates. Current Yea

> Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $240,000. The company is contesting the fine. In addition, an employee is see

> McMahon Inc. reported the following on the company’s statement of cash flows in Year 2 and Year 1: Seventy percent of the net cash flow used for investing activities was used to replace existing capacity. a. Determine McMahonâ&#

> General Motors Corporation (GM) disclosed estimated product warranty payable for comparative years as follows: Presume that GM’s sales were $135,592 million in Year 2 and that the total paid on warranty claims during Year 2 was $3,000

> Parker Manufacturing Co. warrants its products for one year. The estimated product warranty is 2.5% of sales. Assume that sales were $600,000 for January. In February, a customer received warranty repairs requiring $200 of parts and $110 of labor. a. Jou

> In a recent year’s financial statements, Procter & Gamble showed an unfunded pension liability of $5,599 million and a periodic pension cost of $434 million. Explain the meaning of the $5,599 million unfunded pension liability and the $434 million period

> On October 31, Legacy Rocks Inc., a marble contractor, issued for cash 400,000 shares of $10 par common stock at $18, and on November 19, it issued for cash 50,000 shares of preferred stock, $75 par at $80. a. Journalize the entries for October 31 and No

> Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of cumulative preferred 1% stock, $125 par, and 100,000 shares of $150 par common. During its first four years of operations, the following amounts were distribu

> Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month following the end o

> According to a summary of the payroll of Guthrie Co., $560,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $60,000 was subject to state and federal unemployment taxes. a. Calculate the employer’s payroll taxes, using the

> Willow Creek Nursery, with an authorization of 75,000 shares of preferred stock and 200,000 shares of common stock, completed several transactions involving its stock on October 1, the first day of operations. The trial balance at the close of the day fo

> On the first day of the fiscal year, a company issues $65,000, 6%, five-year installment notes that have annual payments of $15,431. The first note payment consists of $3,900 of interest and $11,531 of principal repayment. a. Journalize the entry to reco

> Financial statement data for the years ended December 31 for Dovetail Corporation follow: a. Determine the earnings per share for 20Y3 and 20Y2. b. Does the change in the earnings per share from 20Y2 to 20Y3 indicate a favorable or unfavorable trend?

> The following information about the payroll for the week ended December 30 was obtained from the records of Saine Co.: Tax rates assumed: Social security, 6% Medicare, 1.5% State unemployment (employer only), 5.4% Federal unemployment (employer only),

> Quantas Industries sold $325,000 of consumer electronics during July under a nine-month warranty. The cost to repair defects under the warranty is estimated at 4.5% of the sales price. On November 11, a customer was given $220 cash under terms of the war

> Austin Fisher contributed land, inventory, and $36,000 cash to a partnership. The land had a book value of $120,000 and a market value of $175,000. The inventory had a book value of $50,000 and a market value of $42,000. The partnership also assumed a $3

> A $1,200,000 bond issue on which there is an unamortized premium of $63,956 is redeemed for $1,250,000. Journalize the redemption of the bonds.

> Noric Cruises Inc. reported the following results for the year ended October 31, 20Y9: Retained earnings, November 1, 20Y8 …………….. $12,400,000 Net income ………………………………………………………. 2,350,000 Cash dividends declared ……………………………………….. 175,000 Stock dividends d

> On January 23, 10,000 shares of Tolle Company are acquired at a price of $30 per share plus a $100 brokerage commission. On April 12, a $0.50-per-share dividend was received on the Tolle Company stock. On June 10, 4,000 shares of the Tolle Company stock

> Eclipse Architects earned $1,800,000 during 20Y1 using 12 employees. During 20Y2, the firm reduced revenues to $1,440,000 and reduced the staff to nine employees. a. Determine the revenue per employee for each year. b. Interpret the results.

> EarlKeen Co. sold $260,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 4% of the sales price. On August 15, a customer required a $100 part replacement plus $50 of labor under the w

> The cost of merchandise sold reported on the income statement was $770,000. The accounts payable balance decreased $44,000, and the inventory balance decreased by $66,000 over the year. Determine the amount of cash paid for merchandise.

> A $1,500,000 bond issue on which there is an unamortized discount of $70,100 is redeemed for $1,455,000. Journalize the redemption of the bonds.

> Rockwell Inc. reported the following results for the year ended June 30, 20Y5: Retained earnings, July 1, 20Y4 ………………….. $3,900,000 Net income …………………………………………………….. 714,000 Cash dividends declared …………………………………. 100,000 Stock dividends declared ……………………

> Niles and Cohen, CPAs earned $12,375,000 during 20Y4 using 75 employees. During 20Y5, the firm grew revenues to $15,400,000 and expanded the staff to 88 employees. a. Determine the revenue per employee for each year. b. Interpret the results.

> Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account. a. If the note is issued with a 45-day term, journalize the entries to record: 1. The issuance of the note. 2. The payment of the note at maturity. b. If the note i

> Regling Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $35,000 for the period. The pension formula calculated a pension cost of $201,250. Only $175,000 was contributed to the pension

> Journalize the entries to record the following selected bond investment transactions for Starks Products: a. Purchased for cash $120,000 of Iceline, Inc. 5% bonds at 100 plus accrued interest of $1,000. b. Received first semiannual interest payment. c. S

> The following information was taken from Charu Company’s balance sheet: Fixed assets (net) ………………………………. $860,000 Long-term liabilities ……………………………. 200,000 Total liabilities ……………………………………. 600,000 Total stockholders’ equity …………………….. 250,000 Determin

> On January 1, the first day of the fiscal year, a company issues a $5,000,000, 6%, 10-year bond that pays semiannual interest of $150,000 ($5,000,000 × 6% × ½ year), receiving cash of $5,000,000. Journalize the entries to record (a) The issuance of the b

> Using the bond from Practice Exercise 14-5B, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. In Practice Exercise 14-5B On the first day of the fiscal year, a company issues an $8,000,

> Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet using Method 1 of Exhibit 8. Five hundred thousand shares of common stock are authorized, and 40,000 shares have been reacquired. Common Stock, $120

> Prior to liquidating their partnership, Bonilla and Perez had capital accounts of $185,000 and $245,000, respectively. The partnership assets were sold for $30,000. The partnership had no liabilities. Bonilla and Perez share income and losses equally. a.

> Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $19,500 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee s

> The following information was taken from Sigmund Company’s balance sheet: Fixed assets (net) …………………………… $1,050,000 Long-term liabilities …………………………… 750,000 Total liabilities …………………………………… 850,000 Total stockholders’ equity ………………….. 500,000 Determine

> Using the bond from Practice Exercise 14-5A, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. In Practice Exercise 14-5A On the first day of the fiscal year, a company issues a $7,500,0

> Using the following accounts and balances, prepare the Stockholders’ Equity section of the balance sheet using Method 1 of Exhibit 8. One hundred thousand shares of common stock are authorized, and 5,000 shares have been reacquired. Common Stock, $2 par

> Prior to liquidating their partnership, Wakefield and Barns had capital accounts of $105,000 and $55,000, respectively. The partnership assets were sold for $40,000. The partnership had no liabilities. Wakefield and Barns share income and losses equally.

> A business issued a 45-day note for $80,000 to a creditor on account. The note was discounted at 5%. Journalize the entries to record (a) The issuance of the note and (b) The payment of the note at maturity.

> Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $2,000,000. Plan 2 $2,500,0

> On May 23, Stoltz Realty Inc. issued for cash 80,000 shares of no-par common stock (with a stated value of $3) at $12. On July 6, Stoltz Realty Inc. issued at par value 18,000 shares of preferred 1% stock, $50 par for cash. On September 15, Stoltz Realty

> The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of Medicare tax withheld on total salaries of $90,000 for the period. Earnings of $10,000 are subject to state and federal unemployment compensation taxes at the

> A company reports the following: Cost of goods sold …………………………….. $435,000 Average inventory ………………………………… 72,500 Determine (a) The inventory turnover and (b) The number of days’ sales in inventory. Round to one decimal place.

> IZ Corporation purchased land for $400,000. Later in the year, the company sold a different piece of land with a book value of $200,000 for $240,000. How are the effects of these transactions reported on the statement of cash flows?

> On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, the cost of the available-for-sale securities was $24,260, and the fair value was $26,350. Prepare the adjusting entry to record the unrealized gain

> On the first day of the fiscal year, a company issues an $8,000,000, 11%, five-year bond that pays semiannual interest of $440,000 ($8,000,000 × 11% × ½), receiving cash of $8,308,869. Journalize the bond issuance.

> On May 27, Hydro Clothing Inc. reacquired 75,000 shares of its common stock at $8 per share. On August 3, Hydro Clothing sold 54,000 of the reacquired shares at $11 per share. On November 14, Hydro Clothing sold the remaining shares at $7 per share. Jour

> Prior to liquidating their partnership, Manning and Adamo had capital accounts of $240,000 and $150,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets

> The payroll register of Ruggerio Co. indicates $10,500 of social security withheld and $2,625 of Medicare tax withheld on total salaries of $175,000 for the period. Earnings of $30,000 are subject to state and federal unemployment compensation taxes at t

> A company reports the following: Cost of goods sold …………………………. $660,000 Average inventory ……………………………. 60,000 Determine (a) The inventory turnover and (b) The number of days’ sales in inventory. Round to one decimal place.

> Simkin Corporation purchased land for $420,000. Later in the year, the company sold a different piece of land with a book value of $155,000 for $110,000. How are the effects of these transactions reported on the statement of cash flows?

> Lia Chen and Martin Monroe formed a partnership, dividing income as follows: 1. Annual salary allowance to Chen of $35,000. 2. Interest of 4% on each partner’s capital balance on January 1. 3. Any remaining net income divided to Chen and Monroe, 2:1. Che

> Zero Calories Company has 16,000 shares of cumulative preferred 1% stock, $40 par, and 80,000 shares of $150 par common stock. The following amounts were distributed as dividends: Year 1 ……………………………… $ 21,600 Year 2 …………………………………. 4,000 Year 3 …………………………

> On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, the cost of the available-for-sale securities was $60,250, and the fair value was $57,500. Prepare the adjusting entry to record the unrealized gain

> On the first day of the fiscal year, a company issues a $7,500,000, 8%, five-year bond that pays semiannual interest of $300,000 ($7,500,000 × 8% × ½), receiving cash of $7,811,873. Journalize the bond issuance.

> On January 31, Wilderness Resorts Inc. reacquired 22,500 shares of its common stock at $31 per share. On April 20, Wilderness Resorts sold 12,800 of the reacquired shares at $40 per share. On October 4, Wilderness Resorts sold the remaining shares at $28

> Prior to liquidating their partnership, Joyce and Xi had capital accounts of $50,000 and $105,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were

> Addai Company has provided the following comparative information: You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for t

> The payroll register of Longboat Co. indicates $5,400 of social security withheld and $1,350 of Medicare tax withheld on total salaries of $90,000 for the period. Retirement savings withheld from employee paychecks were $5,400 for the period. Federal wit

> A company reports the following: Sales …………………………………………………………… $4,000,000 Average accounts receivable (net) ………………………. 200,000 Determine (a) The accounts receivable turnover and (b) The number of days’ sales in receivables. Round to one decimal place.

> Staley Inc. reported the following data: Net income …………………………………………………… $280,000 Depreciation expense ………………………………………… 48,000 Loss on disposal of equipment …………………………….. 19,520 Increase in accounts receivable …………………………… 17,280 Increase in accounts paya

> On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $41,500, and the fair value was $46,300. Prepare the December 31 adjusting journal entry to record the unrealiz

> Averill Products Inc. reported the following on the company’s income statement in two recent years: a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. b. Is the number of

> Using the bond from Practice Exercise 14-3B, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. In Practice Exercise 14-3B On the first day of the fiscal year, a company issues a $3,000,

> Holly Renfro contributed a patent, accounts receivable, and $20,000 cash to a partnership. The patent had a book value of $8,000. However, the technology covered by the patent appeared to have significant market potential. Thus, the patent was appraised

> Antique Buggy Corporation has 820,000 shares of $35 par common stock outstanding. On June 8, Antique Buggy Corporation declared a 5% stock dividend to be issued August 12 to stockholders of record on July 13. The market price of the stock was $63 per sha