The stockholders’ equity accounts of Miley Corporation on January 1, 2014, were as follows. Preferred Stock (7%, $100 par noncumulative, 5,000 shares authorized) …………………$ 300,000 Common Stock ($4 stated value, 300,000 shares authorized) ………………………….…1,000,000 Paid-in Capital in Excess of Par Value—Preferred Stock…………………………………….…… 15,000 Paid-in Capital in Excess of Stated Value—Common Stock ………………………………….…480,000 Retained Earnings ………………………………………………………………………………………………. 688,000 Treasury Stock (5,000 common shares) …………………………………………………………………. 40,000 During 2014, the corporation had the following transactions and events pertaining to its stockholders’ equity. Feb. 1 Issued 5,000 shares of common stock for $30,000. Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2014. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1. Instructions: (a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.) (b) Enter the beginning balances in the accounts and post the journal entries to the stockholders’ equity accounts. (Use T-accounts.) (c) Prepare the stockholders’ equity section of the balance sheet at December 31, 2014. (d) Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.)
> Ronald Allerton has just approached a venture capitalist for financing for a new business venture, the development of a local ski hill. On July 1, 2013, Ronald was loaned $140,000 at an annual interest rate of 8%. The loan is repayable over 5 years in an
> Lyman purchased a new piece of equipment to be used in its new facility. The $380,000 piece of equipment was purchased with a $40,000 down payment and with cash received through the issuance of a $340,000, 8%, 5-year mortgage note payable issued on Octob
> On January 1, 2014, Murphy Company issued $1,600,000 face value, 7%, 10-year bonds at $1,717,761. This price resulted in a 6% effective-interest rate on the bonds. Murphy uses the effective-interest method to amortize bond premium or discount. The bonds
> On January 1, 2014, Imelda Corporation issued $2,000,000 face value, 6%, 10-year bonds at $2,154,434. This price resulted in an effective-interest rate of 5% on the bonds. Imelda uses the effective-interest method to amortize bond premium or discount. Th
> Ronald Allerton has just approached a venture capitalist for financing for a new business venture, the development of a local ski hill. On July 1, 2013, Ronald was loaned $140,000 at an annual interest rate of 8%. The loan is repayable over 5 years in an
> Lyman purchased a new piece of equipment to be used in its new facility. The $380,000 piece of equipment was purchased with a $40,000 down payment and with cash received through the issuance of a $340,000, 8%, 5-year mortgage note payable issued on Octob
> On January 1, 2014, Murphy Company issued $1,600,000 face value, 7%, 10-year bonds at $1,717,761. This price resulted in a 6% effective-interest rate on the bonds. Murphy uses the effective-interest method to amortize bond premium or discount. The bonds
> On January 1, 2014, Imelda Corporation issued $2,000,000 face value, 6%, 10-year bonds at $2,154,434. This price resulted in an effective-interest rate of 5% on the bonds. Imelda uses the effective-interest method to amortize bond premium or discount. Th
> Wentworth Co. sold $3,000,000, 7%, 8-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straightline amortization on bond premiums and discounts. Financial statements are prepared annually
> Presented below is the partial bond discount amortization schedule for Pape Corp., which uses the effective-interest method of amortization. Instructions: (a) Prepare the journal entry to record the payment of interest and the discount amortization at
> Holmes Corporation sold $2,200,000, 8%, 5-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. Holmes Corporation uses the straight-line method to amortize bond premium or discount. Instructions: (a) Prepar
> The following section is taken from Zenith Oil Company’s balance sheet at December 31, 2013. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Zenith uses straight-line amortization for any
> Suppose you have been presented with the following selected information taken from the financial statements of Kellogg Company. Instructions: (a) Calculate each of the following ratios for 2014 and 2013. (1) Current ratio. (2) Free cash flow. (3) Debt
> Union Electric sold $5,000,000, 5%, 10-year bonds on January 1, 2014. The bonds were dated January 1 and pay interest on January 1. The bonds were sold at 103. Instructions: (a) Prepare the journal entry to record the issuance of the bonds on January 1,
> On April 1, 2013, CMV Corp. issued $600,000, 5%, 5-year bonds at face value. The bonds were dated April 1, 2013, and pay interest annually on April 1. Financial statements are prepared annually on December 31. Instructions: (a) Prepare the journal entr
> On January 1, 2014, the ledger of Flaming Company contained the following liability accounts. Accounts Payable ………………………………………………..$52,000 Sales Taxes Payable ……………………………………………….8,200 Unearned Service Revenue ………………………………….11,000 During January, the fo
> Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the last part of 2014, Skate City had the following transactions related to notes payable. Aug. 1 Issued a $6,000 note to Wheeler to purchase inventor
> On January 1, 2014, the ledger of Flaming Company contained the following liability accounts. Accounts Payable ………………………………………………..$52,000 Sales Taxes Payable ……………………………………………….8,200 Unearned Service Revenue ………………………………….11,000 During January, the fo
> Phillips Company is a manufacturer of computers. Its controller resigned in October 2014. An inexperienced assistant accountant has prepared the following income statement for the month of October 2014. Prior to October 2014, the company had been profi
> The following data were taken from the records of Clarkson Company for the fiscal year ended June 30, 2014. Instructions: (a) Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.) (b) Prepare an income st
> Leihsing Inc. issues a $600,000, 10%, 10-year mortgage note on December 31, 2013, to obtain financing for a new building. The terms provide for semiannual installment payments of $48,145. Prepare the entry to record the mortgage loan on December 31, 2013
> Explain how IFRS defines a provision and give an example.
> Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows. Instructions: (a) Indicate the missing amount for each letter. (b) Prepare a condensed cost of goods manufactured schedule for Case 1. (c) Prepare an inc
> Bell Company, a manufacturer of audio systems, started its production in October 2014. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an au
> Lott Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Lottâ€
> Suppose selected financial data of Target and Wal-Mart for 2014 are presented here (in millions). Instructions: (a) For each company, compute the following ratios. (1) Current ratio. (8) Return on assets. (2) Accounts receivable turnover. (9) Ret
> The following financial information is for Frizell Company. Additional information: 1. Inventory at the beginning of 2013 was $115,000. 2. Accounts receivable (net) at the beginning of 2013 were $86,000. 3. Total assets at the beginning of 2013 were $6
> Condensed balance sheet and income statement data for Jernigan Corporation are presented here. Additional information: 1. The market price of Jernigan’s common stock was $7.00, $7.50, and $8.50 for 2012, 2013, and 2014, respectively.
> The comparative statements of Osborne Company are presented here. All sales were on account. Net cash provided by operating activities for 2014 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000. Instructions: Compute th
> Here are comparative statement data for Prince Company and King Company, two competitors. All balance sheet data are as of December 31, 2014, and December 31, 2013. Instructions: (a) Prepare a vertical analysis of the 2014 income statement data for Pri
> Condensed financial data of Odgers Inc. follow. Additional information: 1. New plant assets costing $100,000 were purchased for cash during the year. 2. Old plant assets having an original cost of $57,500 and accumulated depreciation of $48,500 were so
> Data for Kurtzel Company are presented in P12-7A. Further analysis reveals the following. 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. 3. All depreciation expense is in the sel
> Presented below is the partial bond discount amortization schedule for Pape Corp., which uses the effective-interest method of amortization. Instructions: (a) Prepare the journal entry to record the payment of interest and the discount amortization at
> Presented below are the financial statements of Kurtzel Company. Additional data: 1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 origi
> Data for Thornton Company are presented in P12-5A. Data given in P12-5A: Thornton Company’s income statement contained the condensed information below. Instructions: Prepare the operating activities section of the statement of cash
> Thornton Company’s income statement contained the condensed information below. Instructions: Prepare the operating activities section of the statement of cash flows using the indirect\ method. THORNTON COMPANY Income Statement For
> Data for Paxson Company are presented in P12-3A. Data given oin P12-3A: The income statement of Paxson Company is presented here. Additional information: 1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000. 2. P
> The income statement of Paxson Company is presented here. Additional information: 1. Accounts receivable decreased $380,000 during the year, and inventory decreased $300,000. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable t
> The following account balances relate to the stockholders’ equity accounts of Smoltz Corp. at year-end. A small stock dividend was declared and issued in 2014. The market price of the shares was $8,800. Cash dividends were $20,000 in
> The comparative balance sheets for Yanik Company as of December 31 are presented below. Additional information: 1. Operating expenses include depreciation expense of $42,000. 2. Land was sold for cash at book value. 3. Cash dividends of $12,000 were pa
> Data for Odgers Inc. are presented in P12-9A. Further analysis reveals that accounts payable pertain to merchandise creditors. Data given in P12-9A: Condensed financial data of Odgers Inc. follow. Instructions: Prepare a statement of cash flows for Od
> You are provided with the following transactions that took place during a recent fiscal year. Instructions: Complete the table, indicating whether each item (1) affects operating (O) activities, investing (I) activities, financing (F) activities, or is
> On January 1, 2014, Everett Corporation had these stockholders’ equity accounts. Common Stock ($10 par value, 70,000 shares issued and outstanding) ………..$700,000 Paid-in Capital in Excess of Par Value ……………………………………………………………500,000 Retained Earnings ……
> Suppose the 2014 Adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. (a) Working capital. (b) Current ratio. (c) Debt to assets ratio. (d) Times inte
> Cepeda Company manufactures backpacks. During 2014, Cepeda issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Cepeda Company for the years 2014 and 2013. Instructions
> On January 1, 2014, Kessler Inc. had these stockholders’ equity balances. Common Stock, $1 par (2,000,000 shares authorized, 600,000 shares issued and outstanding) ……………………………………… $ 600,000 Paid-in Capital in Excess of Par Value …………………………………………. 1,500,
> Pringle Corporation has been authorized to issue 20,000 shares of $100 par value, 7%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2014, the led
> The ledger of Wade Corporation at December 31, 2014, after the books have been closed, contains the following stockholders’ equity accounts. Preferred Stock (10,000 shares issued) ………………………………………. $1,000,000 Common Stock (300,000 shares issued) ……………………
> On December 31, 2013, Paxson Company had 1,300,000 shares of $5 par common stock issued and outstanding. At December 31, 2013, stockholders’ equity had the amounts listed here. Common Stock …………………………………………. $6,500,000 Additional Paid-in Capital …………………
> Tidwell Corporation was organized on January 1, 2014. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were comple
> Wempe Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.
> Yung Corporation sold $2,000,000, 7%, 5-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. Yung Corporation uses the straight-line method to amortize bond premium or discount. Instructions: (a) Prepare al
> The following information is taken from Oler Corp.’s balance sheet at December31, 2013. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Oler uses straight-line amortization for any bond p
> Presented here are liability items for Desmond Inc. at December 31, 2014. Prepare the liabilities section of Desmond’s balance sheet. $ 7,800 Accounts payable Notes payable (due May 1, 2015) Bonds payable (due 2018) Unearned FICA t
> Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown below. Instructions: (a) Calculate each of the following ratios for 2014 and 2013. (1) Current ratio. (2) Free cash flow. (3)
> Slocombe Company sold $6,000,000, 7%, 15-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on December 31. The bonds were sold at 98. Instructions: (a) Prepare the journal entry to record the issuance of the bonds on
> On October 1, 2013, Koppa Corp. issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2013, and pay interest annually on October 1. Financial statements are prepared annually on December 31. Instructions: (a) Prepare the jour
> The following section is taken from Mareska’s balance sheet at December 31, 2013. Current liabilities Interest payable ……………………………………………………..$ 40,000 Long-term liabilities Bonds payable (8%, due January 1, 2017) ………………..500,000 Interest is payable annual
> Ermlar Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2014, Ermlar had the following transactions related to notes payable. Sept. 1 Issued a $12,000 note to Lippe
> Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $150,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annu
> Frevert purchased a new piece of equipment to be used in its new facility. The $370,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a $320,000, 8%, 3-year mortgage note payable issued on Oct
> On January 1, 2014, Jade Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Jade uses the effective-interest method to amortize bond premium or discount. The bonds pay
> On January 1, 2014, Lock Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bo
> On January 1, 2014, the ledger of Hiatt Company contained these liability accounts. Accounts Payable …………………………………………$42,500 Sales Taxes Payable …………………………………………6,600 Unearned Service Revenue ……………………………. 19,000 During January, the following selected tr
> Suppose the 2014 Adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. (a) Working capital. (b) Current ratio. (c) Debt to assets ratio. (d) Times inte
> Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $150,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annu
> Frevert purchased a new piece of equipment to be used in its new facility. The $370,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a $320,000, 8%, 3-year mortgage note payable issued on Oct
> On January 1, 2014, Jade Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Jade uses the effective-interest method to amortize bond premium or discount. The bonds pay
> On January 1, 2014, Lock Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bo
> Wempe Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.
> Yung Corporation sold $2,000,000, 7%, 5-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. Yung Corporation uses the straight-line method to amortize bond premium or discount. Instructions: (a) Prepare al
> The following information is taken from Oler Corp.’s balance sheet at December31, 2013. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Oler uses straight-line amortization for any bond p
> Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown below. Instructions: (a) Calculate each of the following ratios for 2014 and 2013. (1) Current ratio. (2) Free cash flow. (3)
> Slocombe Company sold $6,000,000, 7%, 15-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on December 31. The bonds were sold at 98. Instructions: (a) Prepare the journal entry to record the issuance of the bonds on
> On October 1, 2013, Koppa Corp. issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2013, and pay interest annually on October 1. Financial statements are prepared annually on December 31. Instructions: (a) Prepare the jour
> Presented here are liability items for Desmond Inc. at December 31, 2014. Prepare the liabilities section of Desmond’s balance sheet. $ 7,800 Accounts payable Notes payable (due May 1, 2015) Bonds payable (due 2018) Unearned FICA t
> The following section is taken from Mareska’s balance sheet at December 31, 2013. Current liabilities Interest payable ……………………………………………………..$ 40,000 Long-term liabilities Bonds payable (8%, due January 1, 2017) ………………..500,000 Interest is payable annual
> Ermlar Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2014, Ermlar had the following transactions related to notes payable. Sept. 1 Issued a $12,000 note to Lippe
> On January 1, 2014, the ledger of Hiatt Company contained these liability accounts. Accounts Payable …………………………………………$42,500 Sales Taxes Payable …………………………………………6,600 Unearned Service Revenue ……………………………. 19,000 During January, the following selected tr
> As noted in this chapter, because of global competition, companies have become increasingly focused on reducing costs. To reduce costs and remain competitive, many companies are turning to outsourcing. Outsourcing means hiring an outside supplier to prov
> The primary purpose of managerial accounting is to provide information useful for management decisions. Many of the managerial accounting techniques that you learn in this section of the course will be useful for decisions you make in your everyday life.
> Steve Morgan, controller for Newton Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him—advertising. During the year, the company had instituted an expensive advertising campaign to sell som
> Refer to P14-5A and add the following requirement. Prepare a letter to the president of the company, Shelly Phillips, describing the changes you made. Explain clearly why net income is different after the changes. Keep the following points in mind as yo
> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ ascLogin.cfm to log in and prepare responses to the following. Use the Master Glossary for determining the proper definitions. (a) Discontinued operations. (b) Extraordin
> Kelli Rice, president of LR Industries, wishes to issue a press release to bolster her company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other
> David Lemay is the chief executive officer of Brenna Electronics. Lemay is an expert engineer but a novice in accounting. Lemay asks you, as an accounting student, to explain (a) the bases for comparison in analyzing Brenna’s financial statements and (b)
> The following data are taken from the financial statements of Filbert Company Compute for each year (a) the accounts receivable turnover and (b) the average collection period. What conclusions about the management of accounts receivable can be drawn
> You are a loan officer for Great Plains Bank of Davenport. Jason Putnam, president of J. Putnam Corporation, has just left your office. He is interested in an 8-year loan to expand the company’s operations. The borrowed funds would be u
> Templeton Automotive Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board’s policy requires that, for this dividend to be declared, ne
> Jack Werth, the owner-president of Computer Services Company, is unfamiliar with the statement of cash flows that you, as his accountant, prepared. He asks for further explanation. Instructions: Write him a brief memo explaining the form and content of
> Ken Pember and Robyn Mays are examining the following statement of cash flows for Gilbert Company for the year ended January 31, 2014. GILBERT COMPANY Statement of Cash Flows For the Year Ended January 31, 2014 Sources of cash From sales of merchandise
> Osborn Corporation has paid 60 consecutive quarterly cash dividends (15 years). The last 6 months have been a real cash drain on the company, however, as profit margins have been greatly narrowed by increasing competition. With a cash balance sufficient
> The R&D division of Jobe Corp. has just developed a chemical for sterilizing the vicious Brazilian “killer bees” which are invading Mexico and the southern United States. The president of Jobe is anxious to get the chemical on the market because Jobe pro
> Ken Endicott, your uncle, is an inventor who has decided to incorporate. Uncle Ken knows that you are an accounting major at U.N.O. In a recent letter to you, he ends with the question, “I’m filling out a state incorporation application. Can you tell me
> During a recent period, the fast-food chain Wendy’s International purchased many treasury shares. This caused the number of shares outstanding to fall from 124 million to 105 million. The following information was drawn from the company
> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ asclogin.cfm to log in and prepare responses to the following. (a) What is the definition of current liabilities? (b) What is the definition of long-term obligations? (c)
> Some employees are encouraging and setting up preventive healthcare programs. Here are the percentages for five unhealthy behaviors for individuals with some college education: current cigarette smoker (22.9%), five or more alcoholic drinks at one sittin
> The management of Unruh Inc. is trying to decide whether it can increase its dividend. During the current year, it reported net income of $875,000. It had net cash provided by operating activities of $734,000, paid cash dividends of $92,000, and had capi
> Harry Jackman, president of Weast, Inc., is considering the issuance of bonds to finance an expansion of his business. He has asked you to do the following: (1) discuss the advantages of bonds over common stock financing, (2) indicate the types of bond
> On January 1, 2012, Kenard Corporation issued $3,000,000, 5-year, 8% bonds at 97. Thevbonds pay interest annually on January 1. By January 1, 2014, the market rate of interest for bonds of risk similar to those of Kenard Corporation had risen. As a resul
