All Related Questions of Market Price

Q: At December 31, 2014, Indigo Girls Company has outstanding non

At December 31, 2014, Indigo Girls Company has outstanding non-cancelable purchase commitments for 36,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The com...

Q: Prophet Company signed a long-term purchase contract to buy timber

Prophet Company signed a long-term purchase contract to buy timber from the U.S. Forest Service at $300 per thousand board feet. Under these terms, Prophet must cut and pay $6,000,000 for this timber...

Q: Kelly Clarkson Corporation operates a retail computer store. To improve delivery

Kelly Clarkson Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2014. The terms of acquisition for each truck...

Q: Presented below is information related to Zonker Company.1.

Presented below is information related to Zonker Company. 1. On July 6, Zonker Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the pr...

Q: Hayes Industries purchased the following assets and constructed a building as well

Hayes Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $100,000 ca...

Q: Selected accounts included in the property, plant, and equipment section

Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2013, had the following balances. During 2014, the following trans...

Q: The invoice price of a machine is $50,000.

The invoice price of a machine is $50,000. Various other costs relating to the acquisition and installation of the machine including transportation, electrical wiring, special base, and so on amount t...

Q: Braddock Inc. had the following long-term receivable account balances

Braddock Inc. had the following long-term receivable account balances at December 31, 2013. Transactions during 2014 and other information relating to Braddock’s long-term receivables w...

Q: Donald Lennon is the president, founder, and majority owner of

Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company. Wichita is in dire need of additional capital to keep ope...

Q: The stockholders’ equity section of Martino Inc. at the beginning of

The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below. During the current year, the following transactions occurred. 1. The company issued t...

Q: On January 1, 2015, Titania Inc. granted stock options

On January 1, 2015, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were...

Q: For various reasons a corporation may issue warrants to purchase shares of

For various reasons a corporation may issue warrants to purchase shares of its common stock at specified prices that, depending on the circumstances, may be less than, equal to, or greater than the...

Q: Refer to the data for Barwood Corporation in BE16-6.

Refer to the data for Barwood Corporation in BE16-6. In BE16-6 On January 1, 2014, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of...

Q: Brad Dolan, a stockholder of Rhode Corporation, has asked you

Brad Dolan, a stockholder of Rhode Corporation, has asked you, the firm’s accountant, to explain why his stock warrants were not included in diluted EPS. In order to explain this situation, yo...

Q: Capulet Company establishes a stock-appreciation rights program that entitles its

Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-establish...

Q: McIntyre Corporation issued 2,000 $1,000 bonds at

McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warran...

Q: Assume that Sarazan Company has a share-option plan for top

Assume that Sarazan Company has a share-option plan for top management. Each share option represents the right to purchase a $1 par value ordinary share in the future at a price equal to the fair va...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10par value common stock. The bonds are converted on December 31, 2014, when the unamortized discount is...

Q: Eisler Corporation issued 2,000 $1,000 bonds at

Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market...

Q: McIntyre Corporation issued 2,000 $1,000 bonds at

McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants...

Q: On January 1, 2014, Barwood Corporation granted 5,000

On January 1, 2014, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time d...

Q: Refer to the data for Barwood Corporation in BE16-6.

Refer to the data for Barwood Corporation in BE16-6. In BE16-6 On January 1, 2014, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Ba...

Q: Bedard Corporation reported net income of $300,000 in 2014

Bedard Corporation reported net income of $300,000 in 2014 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stoc...

Q: Ferraro, Inc. established a stock-appreciation rights (SAR

Ferraro, Inc. established a stock-appreciation rights (SAR) program on January 1, 2014, which entitles executives to receive cash at the date of exercise for the difference between the market price of...

Q: Matheny Inc. went public 3 years ago. The board of

Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through t...

Q: On January 1, 2014, Gottlieb Corporation issued $4,

On January 1, 2014, Gottlieb Corporation issued $4,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be co...

Q: On November 1, 2014, Columbo Company adopted a stock-

On November 1, 2014, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted...

Q: Data for Anita Baker Company are presented in E23-18.

Data for Anita Baker Company are presented in E23-18. Instructions Prepare entries in journal form for all adjustments that should be made on a worksheet for a statement of cash flows. E23-20 (Workshe...

Q: On January 1, 2015, Titania Inc. granted stock options

On January 1, 2015, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisa...

Q: Assume that Amazon.com has a stock-option plan for

Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the...

Q: Arantxa Corporation made the following cash purchases of securities during 2014,

Arantxa Corporation made the following cash purchases of securities during 2014, which is the first year in which Arantxa invested in securities. 1. On January 15, purchased 10,000 shares of Sanchez C...

Q: Cordero Corporation has an employee stock-purchase plan which permits all

Cordero Corporation has an employee stock-purchase plan which permits all full-time employees to purchase 10 shares of common stock on the third anniversary of their employment and an additional 15 sh...

Q: Warren Co. purchased a put option on Echo common shares on

Warren Co. purchased a put option on Echo common shares on January 7, 2014, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purc...

Q: The following are two independent situations. Situation 1: Conchita

The following are two independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2014....

Q: On January 1, 2013, Nichols Corporation granted 10,000

On January 1, 2013, Nichols Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Nichols’ $5 par value common stock at a price of $20 per sha...

Q: Lexington Co. has the following available-for-sale securities

Lexington Co. has the following available-for-sale securities outstanding on December 31, 2014 (its first year of operations). During 2015, Summerset Company stock was sold for $9,200, the difference...

Q: Four years after issue, debentures with a face value of $

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 ordinary shares immediately after an interest payment date. At tha...

Q: Four years after issue, debentures with a face value of $

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date....

Q: Johnstone Co. purchased a put option on Ewing common shares on

Johnstone Co. purchased a put option on Ewing common shares on July 7, 2014, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on tha...

Q: Assume that Sarazan Company has a share-option plan for top

Assume that Sarazan Company has a share-option plan for top management. Each share option represents the right to purchase a $1 par value ordinary share in the future at a price equal to the fair valu...

Q: Venzuela Company’s net income for 2014 is $50,000.

Venzuela Company’s net income for 2014 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2013, each exercisable for one share at $6. None has been exerc...

Q: On January 2, 2014, Jones Company purchases a call option

On January 2, 2014, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share....

Q: Howat Corporation earned $360,000 during a period when it

Howat Corporation earned $360,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an average market price of $15 per share during the per...

Q: On December 31, 2010, Beckford Company issues 150,000

On December 31, 2010, Beckford Company issues 150,000 stock appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-establ...

Q: Capulet Company establishes a stock-appreciation rights program that entitles its

Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established...

Q: On August 15, 2013, Outkast Co. invested idle cash

On August 15, 2013, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price...

Q: Brad Dolan, a stockholder of Rhode Corporation, has asked you

Brad Dolan, a stockholder of Rhode Corporation, has asked you, the firm’s accountant, to explain why his stock warrants were not included in diluted EPS. In order to explain this situation, you must b...

Q: The stockholders’ equity section of Martino Inc. at the beginning of

The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below. During the current year, the following transactions occurred. 1. The company issu...

Q: The information below pertains to Barkley Company for 2015. /

The information below pertains to Barkley Company for 2015. There were no changes during 2015 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury s...

Q: On November 3, 2014, Sprinkle Co. invested $200

On November 3, 2014, Sprinkle Co. invested $200,000 in 4,000 shares of the common stock of Pratt Co. Sprinkle classified this investment as available-for-sale. Sprinkle Co. is considering making a mor...

Q: The following statement was prepared by Maloney Corporation’s accountant. /

The following statement was prepared by Maloney Corporation’s accountant. The following additional information relating to Maloney Corporation is available for the year ended Septemb...

Q: Ashley Company is a young and growing producer of electronic measuring instruments

Ashley Company is a young and growing producer of electronic measuring instruments and technical equipment. You have been retained by Ashley to advise it in the preparation of a statement of cash flow...

Q: For various reasons a corporation may issue warrants to purchase shares of

For various reasons a corporation may issue warrants to purchase shares of its common stock at specified prices that, depending on the circumstances, may be less than, equal to, or greater than the cu...

Q: Berg Company adopted a stock-option plan on November 30,

Berg Company adopted a stock-option plan on November 30, 2013, that provided that 70,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporat...

Q: The treasurer of Miller Co. has read on the Internet that

The treasurer of Miller Co. has read on the Internet that the stock price of Wade Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on W...

Q: The transactions below took place during the year 2014. 1

The transactions below took place during the year 2014. 1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market pric...

Q: New Business Ventures, Inc., has an outstanding perpetual bond with

New Business Ventures, Inc., has an outstanding perpetual bond with a 10 percent coupon rate that can be called in one year. The bond makes annual coupon payments. The call premium is set at $150 over...

Q: You bought a share of 4 percent preferred stock for $94

You bought a share of 4 percent preferred stock for $94.89 last year. The market price for your stock is now $96.12. What was your total return for last year?

Q: Jet Black is an international conglomerate with a petroleum division and is

Jet Black is an international conglomerate with a petroleum division and is currently competing in an auction to win the right to drill for crude oil on a large piece of land in one year. The current...

Q: A warrant gives its owner the right to purchase three shares of

A warrant gives its owner the right to purchase three shares of common stock at an exercise price of $53 per share. The current market price of the stock is $58. What is the minimum value of the warra...

Q: Sportime Fitness Center, Inc., issued convertible bonds with a conversion

Sportime Fitness Center, Inc., issued convertible bonds with a conversion price of $51. The bonds are available for immediate conversion. The current price of the company’s common stock is $44 per sha...

Q: A warrant with six months until expiration entitles its owner to buy

A warrant with six months until expiration entitles its owner to buy 10 shares of the issuing firm ’ s common stock for an exercise price of $31 per share. If the current market price of the stock is...

Q: Indicate whether you think the following claims regarding takeovers are true or

Indicate whether you think the following claims regarding takeovers are true or false. In each case, provide a brief explanation for your answer. a. By merging competitors, takeovers have created mono...

Q: Beaver Corp., public company using IFRS, signed a long-

Beaver Corp., public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $2 million. At December 31, 2013, t...

Q: Grappa Grapes Inc. (GGI) grows grapes and produces fine

Grappa Grapes Inc. (GGI) grows grapes and produces fine champagne. The company is located in a very old area of town with easy access to fertile farmland that is excellent for growing grapes. It is ow...

Q: At December 31, 2014, Ichor Ltd. has outstanding non

At December 31, 2014, Ichor Ltd. has outstanding non-cancellable purchase commitments for 45,500 litres of raw material at S3.25 per litre. The material will be used in Ichor's manufacturing process,...

Q: Desrosiers Ltd. had the following long-term receivable account balances

Desrosiers Ltd. had the following long-term receivable account balances at December 31, 2013: Notes receivable $1,800,000 Notes receivable-Employees 400,000 Transactions during 2014 and oth...

Q: Arantxa Corporation made the following purchases of investments during 2014, the

Arantxa Corporation made the following purchases of investments during 2014, the first year in which Arantxa invested in equity securities: 1. On January 15, purchased 9,000 shares of Nirmala Corp.'s...

Q: The following are two independent situations. Situation 1: Lauren

The following are two independent situations. Situation 1: Lauren Inc. received dividends from its common share investments during the year ended December 31, 2014, as follows: • A cash dividend of $1...

Q: The Corrigan Corporation’s 2007 and 2008 financial statements follow, along with

The Corrigan Corporation’s 2007 and 2008 financial statements follow, along with some industry average ratios. a. Assess Corrigan’s liquidity position and determine...

Q: Donna Jamison, a 2003 graduate of the University of Florida with

Donna Jamison, a 2003 graduate of the University of Florida with 4 years of banking experience, was recently brought in as assistant to the chairperson of the board of D’Leon Inc., a...

Q: In the summer of 2008, the Hadaway Company was planning to

In the summer of 2008, the Hadaway Company was planning to finance an expansion with a convertible security. They considered a convertible debenture but feared the burden of fixed interest charges if...

Q: The Howe Computer Company has grown rapidly during the past 5 years

The Howe Computer Company has grown rapidly during the past 5 years. Recently, its commercial bank urged the company to consider increasing its permanent financing. Its bank loan under a line of credi...

Q: Assume that you have just been hired as business manager of Campus

Assume that you have just been hired as business manager of Campus Deli (CD), which is located adjacent to the campus. Sales were $1,100,000 last year, variable costs were 60% of sales, and fixed cost...

Q: Heymann Company bonds have 4 years left to maturity. Interest is

Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. a. What is the yield to maturity at a current market pric...

Q: Hooper Printing Inc. has bonds outstanding with 9 years left to

Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in in...

Q: In June 2007, General Electric (GE) had a book

In June 2007, General Electric (GE) had a book value of equity of $117 billion, 10.3 billion shares outstanding, and a market price of $38.00 per share. GE also had cash of $16 billion, and total debt...

Q: Bubba is a shrimp farmer. In an ironic twist, Bubba

Bubba is a shrimp farmer. In an ironic twist, Bubba is allergic to shellfish, so he cannot eat any shrimp. Each day he has a one-ton supply of shrimp. The market price of shrimp is $10,000 per ton. a....

Q: Brett has almond orchards, but he is sick of almonds and

Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner of the walnut orchard next door has offered to swap this year’s crop with him. Assume he produces 100...

Q: On January 20, Metropolitan, Inc., sold 8 million shares

On January 20, Metropolitan, Inc., sold 8 million shares of stock in an SEO. The market price of Metropolitan at the time was $42.50 per share. Of the 8 million shares sold, 5 million shares were prim...

Q: ABC has 1 million shares outstanding, each of which has a

ABC has 1 million shares outstanding, each of which has a price of $20. It has made a takeover offer of XYZ Corporation, which has 1 million shares outstanding and a price per share of $2.50. Assume t...

Q: Natsam Corporation has $250 million of excess cash. The firm

Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share. Natsam’s board has decided to pay out this cas...

Q: What is the relationship between a bond's market price and its promised

What is the relationship between a bond's market price and its promised yield to maturity? Explain.

Q: What is the effect of stock (not cash) dividends and

What is the effect of stock (not cash) dividends and stock splits on the market price of common stock? Why do corporations declare stock splits and stock dividends?

Q: The plant asset and accumulated depreciation accounts of Pell Corporation had the

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2017: Transactions during 2018 were as follows: a. On January 2, 2018, machinery...

Q: Rantzow-Lear Company buys and sells debt securities expecting to earn

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company’s fiscal year ends on December 31. The following selected transactions rel...

Q: American Surety and Fidelity buys and sells securities expecting to earn profits

American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $8 m...

Q: Amalgamated General Corporation is a consulting firm that also offers financial services

Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected tr...

Q: In November 2018, the Brunswick Company signed two purchase commitments.

In November 2018, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2018. The second...

Q: On October 6, 2018, the Elgin Corporation signed a purchase

On October 6, 2018, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2019. The company’s fiscal year-end is December 31. The contract was exe...

Q: In March 2018, the Phillips Tool Company signed two purchase commitments

In March 2018, the Phillips Tool Company signed two purchase commitments. The first commitment requires Phillips to purchase inventory for $100,000 by June 15, 2018. The second commitment requires the...

Q: [This problem is a continuation of Problem 10–3 in

[This problem is a continuation of Problem 10–3 in Chapter 10 focusing on depreciation.] Problem 10–3 The plant asset and accumulated depreciation accounts of Pell...

Q: LED Corporation owns $1,000,000 of Branch Pharmaceuticals

LED Corporation owns $1,000,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available-for-sale. The market price of Branch’s bonds fell by $450,000, due to concerns abo...

Q: Answer BE 12-17 under the assumption that LED Corporation used

Answer BE 12-17 under the assumption that LED Corporation used the AFS Credit Loss Model introduced in ASU 2016-13 and required after 2020. BE 12-17 LED Corporation owns $1,000,000 of Branch Pharmace...

Q: LED Corporation owns $1,000,000 of Branch Pharmaceuticals

LED Corporation owns $1,000,000 of Branch Pharmaceuticals bonds and classifies its investment as securities available-for-sale. The market price of Branch’s bonds fell by $450,000, due to concerns abo...

Q: Wesco Incorporated’s only product is a combination fertilizer/weedkiller called GrowNWeed

Wesco Incorporated’s only product is a combination fertilizer/weedkiller called GrowNWeed. GrowNWeed is sold nationwide to retail nurseries and garden stores. Zwinger Nursery plans t...

Q: Refer to the situation described in E 14–17.

Refer to the situation described in E 14–17. In E 14–17 Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready...

Q: On January 1, 2018, Gless Textiles issued $12 million

On January 1, 2018, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gles...

Q: On August 1, 2018, Limbaugh Communications issued $30 million

On August 1, 2018, Limbaugh Communications issued $30 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2038. Each $1,000 bond was issued with 20 detachable stock warrants, eac...

Q: Amber Mining and Milling, Inc., contracted with Truax Corporation to

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Amber paid for the lathe by i...

Q: The Jaecke Group, Inc., manufactures various kinds of hydraulic pumps

The Jaecke Group, Inc., manufactures various kinds of hydraulic pumps. In June 2018, the company signed a fouryear purchase agreement with one of its main parts suppliers, Hydraulics, Inc. Over the fo...

Q: The long-term liability section of Eastern Post Corporation’s balance sheet

The long-term liability section of Eastern Post Corporation’s balance sheet as of December 31, 2017, included 10% bonds having a face amount of $40 million and a remaining premium of $6 million. On Ja...

Q: Bradley-Link’s December 31, 2018, balance sheet included the

Bradley-Link’s December 31, 2018, balance sheet included the following items: Long-Term Liabilities _________________________________ ($ in millions) 9.6% convertible bonds, callable at 101 beginning...

Q: On June 13, the board of directors of Siewert Inc.

On June 13, the board of directors of Siewert Inc. declared a 5% stock dividend on its 60 million, $1 par, common shares, to be distributed on July 1. The market price of Siewert common stock was $25...

Q: Refer to the situation described in BE 18–13, but

Refer to the situation described in BE 18–13, but assume a 2-for-1 stock split instead of the 5% stock dividend. Prepare the journal entry to record the stock split if it is to be effected in the form...

Q: Magnetic-Optical Corporation offers a variety of share-based compensation

Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit plan, the company on January 1, 2018, granted restricted stock units (RSUs...

Q: The shareholders’ equity of Core Technologies Company on June 30, 2017

The shareholders’ equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 8 million shares; issued and outstanding, 3 million shares ???……………………...

Q: AGF Foods Company is a large, primarily domestic, consumer Foods

AGF Foods Company is a large, primarily domestic, consumer Foods Company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy&acir...

Q: LTV Corporation grants SARs to key executives. Upon exercise, the

LTV Corporation grants SARs to key executives. Upon exercise, the SARs entitle executives to receive either cash or stock equal in value to the excess of the market price at exercise over the share pr...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that the options are exercised on April 3, 2021, when the market price is $19 per share. What journal entry will National record? In BE 19–3 Under...

Q: Fully vested incentive stock options exercisable at $50 per share to

Fully vested incentive stock options exercisable at $50 per share to obtain 24,000 shares of common stock were outstanding during a period when the average market price of the common stock was $60 and...

Q: Niles Company granted 9 million of its no par common shares to

Niles Company granted 9 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share o...

Q: First Link Services granted 8 million of its $1 par common

First Link Services granted 8 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $6 per s...

Q: Second Link Services granted restricted stock units (RSUs) representing 16

Second Link Services granted restricted stock units (RSUs) representing 16 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After...

Q: Under its executive stock option plan, National Corporation granted 12 million

Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2018, that permit executives to purchase 12 million of the company’s $1 par common shares within th...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that unexpected turnover during 2019 caused the forfeiture of 5% of the stock options. What is the effect on earnings in 2019? In 2020? In BE 19–3...

Q: On January 1, 2018, Hugh Morris Comedy Club (HMCC

On January 1, 2018, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options...

Q: Walters Audio Visual Inc. offers an incentive stock option plan to

Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2018, options were granted for 40 million $1 par common shares. The exercise price is the market...

Q: SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options...

Q: In order to encourage employee ownership of the company’s $1 par

In order to encourage employee ownership of the company’s $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction....

Q: On December 31, 2017, Berclair Inc. had 200 million

On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purc...

Q: On December 31, 2017, Berclair Inc. had 200 million

On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purc...

Q: On December 31, 2017, Berclair Inc. had 200 million

On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purc...

Q: Stanley Department Stores reported net income of $720,000 for

Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2018. Additional Information: Common shares outstanding at Jan. 1, 2018 ……………………………………………………………… 80,000 Incent...

Q: As part of its executive compensation plan, Vertovec Inc. granted

As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s com...

Q: PHN Foods granted 18 million of its no par common shares to

PHN Foods granted 18 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on J...

Q: On January 1, 2018, Adams-Meneke Corporation granted 25

On January 1, 2018, Adams-Meneke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within...

Q: The comparative balance sheets for 2018 and 2017 and the income statement

The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduous’s accounting records is pr...

Q: Refer to the data provided in the P 21–4 for

Refer to the data provided in the P 21–4 for Dux Company. In P 21–4 The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given...

Q: Refer to the data provided in the P 21–11 for

Refer to the data provided in the P 21–11 for Arduous Company. In P 21–11 The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are gi...

Q: Refer to the data provided in the P 21–4 for

Refer to the data provided in the P 21–4 for Dux Company. In P 21–4 The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given...

Q: On January 1, 2018, David Mest Communications granted restricted stock

On January 1, 2018, David Mest Communications granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated...

Q: Refer to the data provided in the P 21–11 for

Refer to the data provided in the P 21–11 for Arduous Company. In P 21–11 The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are gi...

Q: The comparative balance sheets for 2018 and 2017 and the statement of

The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Dux Company. Additional information from Dux’s accounting records is provide...

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2018. At exercise, holders of the SARs are...

Q: Anderson Steel Company began 2018 with 600,000 shares of common

Anderson Steel Company began 2018 with 600,000 shares of common stock outstanding. On March 31, 2018, 100,000 new shares were sold at a price of $45 per share. The market price has risen steadily sinc...

Q: Listed below are several terms and phrases associated with earnings per share

Listed below are several terms and phrases associated with earnings per share. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2018. At exercise, holders of the SARs are...

Q: The following excerpt is from an article reported in an online issue

The following excerpt is from an article reported in an online issue of Bloomberg. (Bloomberg) Ford Motor Co. (F) said it will repurchase $1.8 billion of its shares to reduce dilution from recent stoc...

Q: Allied Paper Products, Inc. offers a restricted stock award plan

Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2018, the company granted 16 million of its $1 par common shares, subject to forfeiture if employ...

Q: Conrad Playground Supply underwent a restructuring in 2018. The company conducted

Conrad Playground Supply underwent a restructuring in 2018. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2018 before any...

Q: On January 1, 2018, VKI Corporation awarded restricted stock units

On January 1, 2018, VKI Corporation awarded restricted stock units (RSUs) representing 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within...

Q: American Optical Corporation provides a variety of share-based compensation plans

American Optical Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2018, that permit e...

Q: As part of its stock-based compensation package, on January

As part of its stock-based compensation package, on January 1, 2018, International Electronics granted restricted stock units (RSUs) representing 50 million $1 par common shares. At exercise, holders...

Q: Santini’s new contract for 2016 indicates the following compensation and benefits:

Santini’s new contract for 2016 indicates the following compensation and benefits: Santini is 54 years old at the end of 2016. He is single and has no dependents. Assume that the emp...

Q: Harmer Inc. is now a successful company. In the early

Harmer Inc. is now a successful company. In the early days (before it became profitable), it issued incentive stock options (ISOs) to its employees. Now Harmer is trying to decide whether to issue non...

Q: The comparative financial statements of Marshall Inc. are as follows.

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y...

Q: Pro-Builders Corporation has 1,500,000 shares of

Pro-Builders Corporation has 1,500,000 shares of $5 par common stock outstanding. On September 2, Pro-Builders Corporation declared a 3% stock dividend to be issued November 30 to stockholders of reco...

Q: Antique Buggy Corporation has 820,000 shares of $35 par

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...

Q: Kimberly Payne and Arionna Maples decide to form a partnership by combining

Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $20,000; accounts...

Q: Senior Life Co. is an HMO for businesses in the Portland

Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (800,000 shares authorized; 500,000 shares is...

Q: Nav-Go Enterprises Inc. produces aeronautical navigation equipment. The

Nav-Go Enterprises Inc. produces aeronautical navigation equipment. The stockholders’ equity accounts of Nav-Go Enterprises Inc., with balances on January 1, 20Y3, are as follows: Common Stock, $5 sta...

Q: Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail

Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike Corp. has declared the following annual dividends over...

Q: In teams, select a public company that interests you. Obtain

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 Exchang...

Q: Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts

Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 20Y5, are as follows: Common Stock, $20 stated value (...

Q: Last Unguaranteed Financial Inc. purchased the following trading securities during Year

Last Unguaranteed Financial Inc. purchased the following trading securities during Year 1, its first year of operations: The market price per share for the trading security portfolio on December 31,...

Q: Storm, Inc. purchased the following available-for-sale

Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: The market price per share for the available-for-sale security portfolio on December 31...

Q: The market price for Microsoft Corporation closed at $55.48

The market price for Microsoft Corporation closed at $55.48 and $46.45 on December 31, current year, and previous year, respectively. The dividends per share were $1.24 for current year and $1.12 for...

Q: Pecan Theatre Inc. owns and operates movie theaters throughout Florida and

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000;...

Q: The following information was taken from the financial statements of Tolbert Inc

The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year: Common stock, $20 par (no change during the year) ………………… $10,000,000 Pref...

Q: The comparative financial statements of Stargel Inc. are as follows.

The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2. Instructions Determine the following measures for 20Y...

Q: The financial statements for Nike, Inc., are presented in Appendix

The financial statements for Nike, Inc., are presented in Appendix D at the end of the text. Use the following additional information (in thousands): Accounts receivable at May 31, 2014 ……………………. $ 3,...

Q: Insurance companies and pension plans hold large quantities of bond investments.

Insurance companies and pension plans hold large quantities of bond investments. Discount Insurance Corp. purchased $2,100,000 of 6.0% bonds of Soucy, Inc., for 116 on January 1, 2012. These bonds pay...

Q: Insurance companies and pension plans hold large quantities of bond investments.

Insurance companies and pension plans hold large quantities of bond investments. Brighton Insurance Corp. purchased $2,300,000 of 10.0% bonds of Scanlon, Inc., for 114 on January 1, 2012. These bonds...

Q: Macy’s, Inc., is one the nation’s premier retailers, with

Macy’s, Inc., is one the nation’s premier retailers, with fiscal 2010 sales of $25 billion. The company operates about 810 Macy’s department store...

Q: Follow the instructions preceding Problem 9.61. Write the audit

Follow the instructions preceding Problem 9.61. Write the audit approach section following the cases in the chapter. The following is an excerpt from an article, “Memory Chip Trader Gets 14 Years for...

Q: The market for apple pies in the city of Ectenia is competitive

The market for apple pies in the city of Ectenia is competitive and has the following demand schedule: Price Quantity ………………….…….Demanded $1 ………………………………………….….1,200 pies 2 …………………………………………….……….1,10...

Q: The nation of Textilia does not allow imports of clothing. In

The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 3 million T-shirts. One day, after reading Adam Smith’...

Q: Eastern Corporation, the investment banking company, often has extra cash

Eastern Corporation, the investment banking company, often has extra cash to invest. Suppose Eastern buys 1,000 shares of Dream, Inc., stock at $57 per share. Assume Eastern expects to hold the Dream...

Q: Summer Corporation, the investment banking company, often has extra cash

Summer Corporation, the investment banking company, often has extra cash to invest. Suppose Summer buys 700 shares of Musica, Inc., stock at $59 per share. Assume Summer expects to hold the Musica sto...

Q: All America Bank, the nationwide banking company, owns many types

All America Bank, the nationwide banking company, owns many types of investments.Assume that All America Bank paid $650,000 for trading securities on December 5. Two weekslater, All America Bank recei...

Q: Refer to the All America Bank data in Quiz question 5-

Refer to the All America Bank data in Quiz question 5-45. At December 31, All AmericaBank’s balance sheet should report a. Short-term investment of $655,000. b. Unrealized gain of $5,000. c. Short-ter...

Q: Angus the sheep farmer sells wool to Barnaby the knitter for $

Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf o...

Q: All other things held constant, how would the market price of

All other things held constant, how would the market price of a bond be affected if coupon interest payments were made semiannually instead of annually?

Q: If a convertible bond has a conversion ratio of 20, a

If a convertible bond has a conversion ratio of 20, a face value of $1,000, a coupon rate of 8 percent, and the market price for the company’s stock is $15 per share, what is the convertible bond’s co...

Q: Refer to the situation described in BE 18–13, but

Refer to the situation described in BE 18–13, but assume a 2-for-1 stock split instead of the 5% stock dividend. Prepare the journal entry to record the stock split if it is not to be effected in the...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that the options expire without being exercised. What journal entry will National record? In BE 19–3 Under its executive stock option plan, Nation...

Q: On June 30, Setzer Corporation had a market price of $

On June 30, Setzer Corporation had a market price of $100 per share of common stock. For the previous year, Setzer paid an annual dividend of $4.00. Compute the dividend yield for Setzer Corporation....

Q: On October 23, Wilkerson Company had a market price of $

On October 23, Wilkerson Company had a market price of $40 per share of common stock. For the previous year, Wilkerson paid an annual dividend of $1.20. Compute the dividend yield for Wilkerson Compan...

Q: Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the

Copper Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Copper Grill Restaurant Corporation, which had 50,000 shares of common stock outstanding, decla...

Q: A call option on Bedrock Boulders stock has a market price of

A call option on Bedrock Boulders stock has a market price of $7. The stock sells for $30 a share, and the option has an exercise price of $25 a share. a. What is the exercise value of the call option...

Q: What will be the nominal rate of return on a perpetual preferred

What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $60, (b) $80, (c) $100, and (d) $140...

Q: United Parcel Service (UPS), Inc., had the following stockholders’

United Parcel Service (UPS), Inc., had the following stockholders’ equity amounts on December 31, 2012 (adapted, in millions): Common stock and additional paid-in capital; 1,135 shares issued............

Q: A company declares a 5% stock dividend. The debit to

A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal to a. The book value of the shares to be issued. b. The excess of the market price over the original issue pri...

Q: Which of the following statements is not true about a 3-

Which of the following statements is not true about a 3-for-1 stock split? a. Total stockholders’ equity increases. b. Par value is reduced to one-third of what it was before the split. c. Retained Ea...

Q: At December 31, 2012, Mendonca Mall, Inc., reported

At December 31, 2012, Mendonca Mall, Inc., reported stockholders’ equity as follows: Common stock, $0.50 par, 500,000 shares authorized, 350,000 shares issued......... $ 175,000 Additional paid-in cap...

Q: At December 31, 2012, Rondeau Mall, Inc., reported

At December 31, 2012, Rondeau Mall, Inc., reported stockholders’ equity as follows: Common stock, $1.50 par, 700,000 shares authorized, 310,000 shares issued............ $ 465,000 Additional paid-in c...

Q: Evaluate the common stock of Tristan Distributing Company as an investment.

Evaluate the common stock of Tristan Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased in attractivene...

Q: Evaluate the common stock of Orville Distributing Company as an investment.

Evaluate the common stock of Orville Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased in attractivene...

Q: Comparative financial statement data of Hamden Optical Mart follow:

Comparative financial statement data of Hamden Optical Mart follow: Other information: 1. Market price of Hamden common stock: $102.17 at December 31, 2012, and $77.01 at December 31, 2011 2. Common...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to CDRom.com and Web Stores and have assembled the following data. Selected income statement data for th...

Q: Comparative financial statement data of Panfield Optical Mart follow:

Comparative financial statement data of Panfield Optical Mart follow: Other information: 1. Market price of Panfield common stock: $94.38 at December 31, 2012, and $85.67 at December 31, 2011 2. Com...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to Topline.com and E-shop Stores and have assembled the following data. Selected income statement data f...

Q: Capital Experts, Ltd., (CEL) specializes in taking underperforming

Capital Experts, Ltd., (CEL) specializes in taking underperforming companies to a higher level of performance. CEL’s capital structure at December 31, 2011, included 14,000 shares of $2.25 preferred s...

Q: Better Experts Ltd. (BEL) specializes in taking underperforming companies

Better Experts Ltd. (BEL) specializes in taking underperforming companies to a higher level of performance. BEL’s capital structure at December 31, 2011, included 10,000 shares of $2.25 preferred stoc...

Q: This case is based on the consolidated financial statements of RadioShack Corporation

This case is based on the consolidated financial statements of RadioShack Corporation given in Appendix B at the end of this book. In particular, this case uses RadioShack Corporation’s consolidated s...

Q: The stockholders’ equity for Dairy Place Drive-Ins (DP)

The stockholders’ equity for Dairy Place Drive-Ins (DP) on December 31, 2012, follows: Stockholders’ Equity Common stock, $0.30 par, 2,600,000 shares authorized, 600,000 shares issued ……. $ 180,000 Pa...

Q: The balance sheet of Basket Rug Company reported the following:

The balance sheet of Basket Rug Company reported the following: Redeemable preferred stock, 5%, $70 par value, redemption value $35,000; outstanding 400 shares............................................

Q: The stockholders’ equity for Perfect Desserts Drive-Ins (PD)

The stockholders’ equity for Perfect Desserts Drive-Ins (PD) on December 31, 2012, follows: Stockholders’ Equity Common stock, $0.75 par, 2,700,000 shares authorized, 500,000 shares issued …….. $ 375,...

Q: The balance sheet of Beecham Rug Company reported the following:

The balance sheet of Beecham Rug Company reported the following: Redeemable preferred stock, 6%, $90 par value, redemption value $25,000; outstanding 200 shares...........................................

Q: Fresh Produce Foods, Inc., is authorized to issue 3,

Fresh Produce Foods, Inc., is authorized to issue 3,750,000 shares of $5.00 par common stock. In its initial public offering during 2012, Fresh Produce issued 360,000 shares of its $5.00 par common st...

Q: Paris Jewelry Company reported the following summarized balance sheet at December 31

Paris Jewelry Company reported the following summarized balance sheet at December 31, 2012: Assets Current assets................................................................................. $ 33,...

Q: Healthy Living Foods, Inc., is authorized to issue 4,

Healthy Living Foods, Inc., is authorized to issue 4,250,000 shares of $1.00 par common stock. In its initial public offering during 2012, Healthy Living issued 390,000 shares of its $1.00 par common...

Q: Madrid Jewelry Company reported the following summarized balance sheet at December 31

Madrid Jewelry Company reported the following summarized balance sheet at December 31, 2012: Assets Current assets.........................................................................................

Q: For fiscal year 2012, Mango Computer, Inc., reported net

For fiscal year 2012, Mango Computer, Inc., reported net sales of $19,323 million, net income of $1,997 million, and no significant discontinued operations, extraordinary items, or accounting changes....

Q: Dickinson Company has $12 million in assets. Currently half of

Dickinson Company has $12 million in assets. Currently half of these assets are financed with long-term debt at 10 percent and half with common stock having a par value of $8. Ms. Smith, vice-presiden...

Q: You are considering an investment in Roxie’s Bed & Breakfast Corp.

You are considering an investment in Roxie’s Bed & Breakfast Corp. During the last year the firm’s income statement listed an addition to retained earnings of $4.8 million and common stock dividends o...

Q: Ravonette Corporation issued 300 shares of $10 par value ordinary shares

Ravonette Corporation issued 300 shares of $10 par value ordinary shares and 100 shares of $50 par value preference shares for a lump sum of $13,500. The ordinary shares have a market price of $20 per...

Q: Ravonette Corporation issued 300 shares of $10 par value common stock

Ravonette Corporation issued 300 shares of $10 par value common stock and 100 shares of $50 par value preferred stock for a lump sum of $13,500. The common stock has a market price of $20 per share, a...

Q: Hartman Inc. issues 500 shares of $10 par value common

Hartman Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000. Instructions (a) Prepare the journal entry for the issuance w...

Q: The following data were taken from the balance sheet accounts of Wickham

The following data were taken from the balance sheet accounts of Wickham Corporation on December 31, 2012. Current assets …………………………………………………………….. $540,000 Debt investments ………………………………………………………….. 6...

Q: Shown below is the liabilities and stockholders’ equity section of the balance

Shown below is the liabilities and stockholders’ equity section of the balance sheet for Ingalls Company and Wilder Company. Each has assets totaling $4,200,000. For the year, each...

Q: Seles Corporation’s charter authorized issuance of 100,000 shares of $

Seles Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of...

Q: Myers Company provides you with the following condensed balance sheet information.

Myers Company provides you with the following condensed balance sheet information. Instructions For each transaction below, indicate the dollar impact (if any) on the following five items: (1) Total...

Q: Earnhart Corporation has outstanding 3,000,000 shares of common

Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its Retained Earnings account at January 1, 2012, was $24,000,000, and it then had Paid...

Q: Mask Company has 30,000 shares of $10 par value

Mask Company has 30,000 shares of $10 par value common stock authorized and 20,000 shares issued and outstanding. On August 15, 2012, Mask purchased 1,000 shares of treasury stock for $18 per share. M...

Q: The financial statements of P&G are presented in Appendix 5B

The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to these financial statements and the...

Q: Go to the book’s companion website and use information found there to

Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What is the par or stated value of Coca-Cola...

Q: Donald Lennon is the president, founder, and majority owner of

Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company. Wichita is in dire need of additional capital to keep opera...

Q: On January 1, 2012, Agassi Corporation had the following stockholders’

On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding) ……….. $600,000 Paid-in Capital in Excess of P...

Q: Go to the book’s companion website and use information found there to

Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) What is the par or stated value of Coca-Cola...

Q: Assume that Sarazan Company has a share-option plan for top

Assume that Sarazan Company has a share-option plan for top management. Each share option represents the right to purchase a $1 par value ordinary share in the future at a price equal to the fair valu...

Q: Donald Lennon is the president, founder, and majority owner of

Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company. Wichita is in dire need of additional capital to keep opera...

Q: On January 1, 2012, Agassi Corporation had the following stockholders’

On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding) ……….. $600,000 Paid-in Capital in Excess of P...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2012, when the unamortized discount is $...

Q: Four years after issue, debentures with a face value of $

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date....

Q: Lexington Co. has the following available-for-sale securities

Lexington Co. has the following available-for-sale securities outstanding on December 31, 2012 (its first year of operations). During 2013, Summerset Company stock was sold for $9,200, the differenc...

Q: On January 1, 2012, Barwood Corporation granted 5,000

On January 1, 2012, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time d...

Q: Refer to the data for Barwood Corporation in BE16-6.

Refer to the data for Barwood Corporation in BE16-6. Repeat the requirements assuming that instead of options, Barwood granted 2,000 shares of restricted stock. In BE16-6 On January 1, 2012, Barwood...

Q: Capriati Corporation made the following cash purchases of securities during 2012,

Capriati Corporation made the following cash purchases of securities during 2012, which is the first year in which Capriati invested in securities. 1. On January 15, purchased 9,000 shares of Gonzalez...

Q: Bedard Corporation reported net income of $300,000 in 2012

Bedard Corporation reported net income of $300,000 in 2012 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stoc...

Q: Presented on page 1032 are two independent situations. Situation 1

Presented on page 1032 are two independent situations. Situation 1 Hatcher Cosmetics acquired 10% of the 200,000 shares of common stock of Ramirez Fashion at a total cost of $14 per share on March 18,...

Q: The treasurer of Miller Co. has read on the Internet that

The treasurer of Miller Co. has read on the Internet that the stock price of Wade Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on W...

Q: Johnstone Co. purchased a put option on Ewing common shares on

Johnstone Co. purchased a put option on Ewing common shares on July 7, 2012, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on tha...

Q: Ferraro, Inc. established a stock-appreciation rights (SAR

Ferraro, Inc. established a stock-appreciation rights (SAR) program on January 1, 2012, which entitles executives to receive cash at the date of exercise for the difference between the market price of...

Q: Warren Co. purchased a put option on Echo common shares on

Warren Co. purchased a put option on Echo common shares on January 7, 2012, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purc...

Q: On November 3, 2012, Sprinkle Co. invested $200

On November 3, 2012, Sprinkle Co. invested $200,000 in 4,000 shares of the common stock of Pratt Co. Sprinkle classified this investment as available-for-sale. Sprinkle Co. is considering making a mor...

Q: On January 2, 2012, Jones Company purchases a call option

On January 2, 2012, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share....

Q: On August 15, 2012, Outkast Co. invested idle cash

On August 15, 2012, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price...

Q: On January 1, 2011, Trillini Corporation issued $3,

On January 1, 2011, Trillini Corporation issued $3,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be co...

Q: On November 1, 2011, Olympic Company adopted a stock-

On November 1, 2011, Olympic Company adopted a stock-option plan that granted options to key executives to purchase 40,000 shares of the company’s $10 par value common stock. The options were granted...

Q: On January 1, 2012, Magilla Inc. granted stock options

On January 1, 2012, Magilla Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisa...

Q: On January 1, 2011, Scooby Corporation granted 10,000

On January 1, 2011, Scooby Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Scooby’s $5 par value common stock at a price of $20 per shar...

Q: Ravonette Corporation issued 300 shares of $10 par value common stock

Ravonette Corporation issued 300 shares of $10 par value common stock and 100 shares of $50 par value preferred stock for a lump sum of $13,500. The common stock has a market price of $20 per share, a...

Q: Zambrano Company’s net income for 2012 is $40,000.

Zambrano Company’s net income for 2012 is $40,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2011, each exercisable for one share at $8. None has been exerc...

Q: Werth Corporation earned $260,000 during a period when it

Werth Corporation earned $260,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an average market price of $15 per share during the per...

Q: On December 31, 2009, Flessel Company issues 120,000

On December 31, 2009, Flessel Company issues 120,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-establi...

Q: Derrick Company establishes a stock-appreciation rights program that entitles its

Derrick Company establishes a stock-appreciation rights program that entitles its new president, Dan Scott, to receive cash for the difference between the market price of the stock and a pre-establish...

Q: The stockholders’ equity section of Martino Inc. at the beginning of

The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 1,000,000 shares, 300,000 shares issued and outstanding ………...

Q: Berg Company adopted a stock-option plan on November 30,

Berg Company adopted a stock-option plan on November 30, 2011, that provided that 70,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporat...

Q: Assume that Amazon has a stock-option plan for top management

Assume that Amazon has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair...

Q: The information below pertains to Barkley Company for 2013. Net

The information below pertains to Barkley Company for 2013. Net income for the year ……………………………………………………………………………………. $1,200,000 8% convertible bonds issued at par ($1,000 per bond); each bond is conv...

Q: Incurring long-term debt with an arrangement whereby lenders receive an

Incurring long-term debt with an arrangement whereby lenders receive an option to buy common stock during all or a portion of the time the debt is outstanding is a frequent corporate financing practic...

Q: For various reasons a corporation may issue warrants to purchase shares of

For various reasons a corporation may issue warrants to purchase shares of its common stock at specified prices that, depending on the circumstances, may be less than, equal to, or greater than the cu...

Q: Chorkina Corporation, a new audit client of yours, has not

Chorkina Corporation, a new audit client of yours, has not reported earnings per share data in its annual reports to stockholders in the past. The treasurer, Beth Botsford, requested that you furnish...

Q: Brad Dolan, a stockholder of Rhode Corporation, has asked you

Brad Dolan, a stockholder of Rhode Corporation, has asked you, the firm’s accountant, to explain why his stock warrants were not included in diluted EPS. In order to explain this situation, you must b...

Q: Kellogg Company in its 2004 Annual Report in Note 1—Accounting

Kellogg Company in its 2004 Annual Report in Note 1—Accounting Policies made the comment on page 962 about its accounting for employee stock options and other stock-based compensatio...

Q: In this simulation, you are asked to address questions related to

In this simulation, you are asked to address questions related to the accounting for stock options and earnings per share computations. Prepare responses to all parts.

Q: Ravonette Corporation issued 300 shares of $10 par value ordinary shares

Ravonette Corporation issued 300 shares of $10 par value ordinary shares and 100 shares of $50 par value preference shares for a lump sum of $13,500. The ordinary shares have a market price of $20 per...

Q: Cordero Corporation has an employee share-purchase plan which permits all

Cordero Corporation has an employee share-purchase plan which permits all full-time employees to purchase 10 ordinary shares on the third anniversary of their employment and an additional 15 shares on...

Q: Hartman Inc. issues 500 shares of $10 par value common

Hartman Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000. Instructions (a) Prepare the journal entry for the issuance w...

Q: The following data were taken from the balance sheet accounts of Wickham

The following data were taken from the balance sheet accounts of Wickham Corporation on December 31, 2012. Current assets …………………………………………………………….. $540,000 Debt investments ………………………………………………………….. 6...

Q: Shown below is the liabilities and stockholders’ equity section of the balance

Shown below is the liabilities and stockholders’ equity section of the balance sheet for Ingalls Company and Wilder Company. Each has assets totaling $4,200,000. For the year, each...

Q: Seles Corporation’s charter authorized issuance of 100,000 shares of $

Seles Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of...

Q: Myers Company provides you with the following condensed balance sheet information.

Myers Company provides you with the following condensed balance sheet information. Instructions For each transaction below, indicate the dollar impact (if any) on the following five items: (1) Total...

Q: Earnhart Corporation has outstanding 3,000,000 shares of common

Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its Retained Earnings account at January 1, 2012, was $24,000,000, and it then had Paid...

Q: Mask Company has 30,000 shares of $10 par value

Mask Company has 30,000 shares of $10 par value common stock authorized and 20,000 shares issued and outstanding. On August 15, 2012, Mask purchased 1,000 shares of treasury stock for $18 per share. M...

Q: The financial statements of P&G are presented in Appendix 5B

The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to these financial statements and the...

Q: Swaps often contain caps or floors. In this problem, you

Swaps often contain caps or floors. In this problem, you are to construct an oil contract that has the following characteristics: The initial cost is zero. Then in each period, the buyer pays the mark...

Q: Sara’s Salsa Company produces its condiments in two types: Extra Fine

Sara’s Salsa Company produces its condiments in two types: Extra Fine for restaurant customers and Family Style for home use. Salsa is prepared in department 1 and packaged in depart...

Q: Wade Company makes two distinct products with the following information available for

Wade Company makes two distinct products with the following information available for each. The company’s direct labor rate is $20 per direct labor hour (DLH). Additional informati...

Q: Tent Pro produces two lines of tents sold to outdoor enthusiasts.

Tent Pro produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B the tents are sewn and folded. The activities, costs, and drivers...

Q: Way Cool produces two different models of air conditioners. The company

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in...

Q: Consider the following data for two products of Gitano Manufacturing.

Consider the following data for two products of Gitano Manufacturing. Required1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for...

Q: Refer to the information in Exercise 4-6 to answer the

Refer to the information in Exercise 4-6 to answer the following requirements. Information from 4-6: Way Cool produces two different models of air conditioners. The company produces the mechanical sys...

Q: Refer to the information in Exercise 4-6 to answer the

Refer to the information in Exercise 4-6 to answer the following requirements. Information from Exercise 4-6: Way Cool produces two different models of air conditioners. The company produces the mech...

Q: Suppose that Sea Shell oil company (SS) is pumping oil

Suppose that Sea Shell oil company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 10 million barrels it pumps each yea...

Q: After mining 9,273 tons of coal, Blue Sky Mining’s

After mining 9,273 tons of coal, Blue Sky Mining’s managers note that the marginal cost of mining the next ton of coal would be $40 per ton. They also calculate that the user cost of mining that next...

Q: Suppose that the government has been supporting the price of corn.

Suppose that the government has been supporting the price of corn. Its free market price is $2.50 per bushel, but the government has been setting a support price of $3.50 per bushel. Which of the foll...

Q: The desire to maximize profits can work against racial and other types

The desire to maximize profits can work against racial and other types of discrimination. To see this, consider two equally productive accountants named Ted and Jared. Ted is black, and Jared is white...

Q: If the current market price rises, does current extraction increase or

If the current market price rises, does current extraction increase or decrease? What if the future market price rises? Do these changes in current extraction help to ensure that the resource is extra...

Q: The Windshield division of Fast Car Co. makes windshields for use

The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000...

Q: Refer to information in QS 9-11. If the Windshield

Refer to information in QS 9-11. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divis...

Q: You produce widgets for sale in a perfectly competitive market at a

You produce widgets for sale in a perfectly competitive market at a market price of $10 per widget. Your widgets are manufactured in two plants, one in Massachusetts and the other in Connecticut. Beca...

Q: Review the numerical example about Race Car Motors. Calculate the profit

Review the numerical example about Race Car Motors. Calculate the profit earned by the upstream division, the downstream division, and the firm as a whole in each of the three cases examined: (a) the...

Q: A monopolist can produce at a constant average (and marginal)

A monopolist can produce at a constant average (and marginal) cost of AC = MC = $5. It faces a market demand curve given by Q = 53 – P. a. Calculate the profit-maximizing price and quantity for this...

Q: Two firms compete in selling identical widgets. They choose their output

Two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve P = 30 – Q where Q = Q1 + Q2. Until recently, both firms had zero ma...

Q: A firm produces a product in a competitive industry and has

A firm produces a product in a competitive industry and has a total cost function C = 50 + 4q + 2q2 and a marginal cost function MC = 4 + 4q.At the given market price of $20, the firm is producing 5 u...

Q: Suppose that a competitive firm has a total cost function C

Suppose that a competitive firm has a total cost function C(q)= 450+15q+2q2 and a marginal cost function MC(q)=15+4q.If the market price is P = $115 per unit, find the level of output produced by the...

Q: Suppose that a competitive firm’s marginal cost of producing output q

Suppose that a competitive firm’s marginal cost of producing output q is given by MC(q) = 3 + 2q.Assume that the market price of the firm’s product is $9. a.What level of output will the firm produce...

Q: The United States currently imports all of its coffee.The

The United States currently imports all of its coffee.The annual demand for coffee by U.S. consumers is given by the demand curve Q = 250 – 10P, where Q is quantity (in millions of pounds) and P is th...

Q: Discuss when each of the following types of businesses is likely to

Discuss when each of the following types of businesses is likely to recognize revenues and expenses. a. A bank lends money for home mortgages. b. A travel agency books hotels, transportation, and simi...

Q: Exhibits 7.17 and 7.18 provide footnote excerpts to

Exhibits 7.17 and 7.18 provide footnote excerpts to the financial reports of The Coca-Cola Company and Eli Lilly and Company that discuss the stock option grants given to the employees of the two firm...

Q: Exhibit 7.19 summarizes the information disclosed by a large conglomerate

Exhibit 7.19 summarizes the information disclosed by a large conglomerate regarding its stock option plans for Years 2–4. Assume an income tax rate of 35%. REQUIRED a. The average o...

Q: Sun Microsystems, Inc., develops, manufactures, and sells computers

Sun Microsystems, Inc., develops, manufactures, and sells computers for network systems. Exhibit 5.21 presents selected financial data for Sun Microsystems for each of the five years ending June 30, 2...

Q: Exhibit 5.22 presents selected financial data for Best Buy Co

Exhibit 5.22 presents selected financial data for Best Buy Co., Inc., and Circuit City Stores, Inc., for fiscal 2008 and 2007. Best Buy and Circuit City operate as specialty retailers offering a wide...

Q: Exhibit 5.23 presents selected financial data for ABC Auto,

Exhibit 5.23 presents selected financial data for ABC Auto, and XYZ Comics, for fiscal Year 5 and Year 6. ABC Auto manufactures automobile components that it sells to automobile manufacturers. Competi...

Q: Exhibit 5.24 presents selected financial data for The Tribune Company

Exhibit 5.24 presents selected financial data for The Tribune Company and The Washington Post Company for fiscal 2006 and 2007. The Washington Post Company is an education and media company. It owns,...

Q: Delta Air Lines, Inc., is one of the largest airlines

Delta Air Lines, Inc., is one of the largest airlines in the United States. It has operated on the verge of bankruptcy for several years. Exhibit 5.18 presents selected financial data for Delta Air Li...

Q: Exhibit 7.17 includes a footnote excerpt from the annual report

Exhibit 7.17 includes a footnote excerpt from the annual report of The Coca-Cola Company for 2004. The beverage company offers stock options to key employees under plans approved by stockholders. REQ...

Q: The Coca-Cola Company is a global soft drink beverage company

The Coca-Cola Company is a global soft drink beverage company (ticker symbol ¼ KO) that is a primary and direct competitor with PepsiCo. The data in Exhibits 12.14–12.1...

Q: The Coca-Cola Company is a global soft drink beverage company

The Coca-Cola Company is a global soft drink beverage company (ticker: KO) that is a primary and direct competitor with PepsiCo. The data in Chapter 12’s Exhibits 12.14, 12.15, and 1...

Q: In Problem 10.16, we projected financial statements for Walmart

In Problem 10.16, we projected financial statements for Walmart Stores, Inc. (Walmart) for Years +1 through +5. The data in Chapter 12’s Exhibits 12.17, 12.18, and 12.19 include the...

Q: On February 1, 2018, Bell Co. decides to invest

On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The...

Q: On June 1, 2018, Josh’s Restaurant decides to invest excess

On June 1, 2018, Josh’s Restaurant decides to invest excess cash of $54,400 from the tourist season by purchasing a Jackrabbit, Inc. bond at face value. At year- end, December 31, 2018, Jackrabbit’s b...

Q: On January 1, 2018, Powell Company issued $350,

On January 1, 2018, Powell Company issued $350,000 of 10%, five-year bonds payable at 102. Powell Company has extra cash and wishes to retire the bonds payable on January 1, 2019, immediately after ma...

Q: The Tusquittee Company is a retail company that began operations on October

The Tusquittee Company is a retail company that began operations on October 1, 2018, when it incorporated in the state of North Carolina. The Tusquittee Company is authorized to issue 100,000 shares o...

Q: The stockholders’ equity of Lakeside Occupational Therapy, Inc. on December

The stockholders’ equity of Lakeside Occupational Therapy, Inc. on December 31, 2017, follows: On April 30, 2018, the market price of Lakeside’s common stock was...

Q: Self-Defense Schools, Inc. is authorized to issue 200

Self-Defense Schools, Inc. is authorized to issue 200,000 shares of $2 par common stock. The company issued 73,000 shares at $5 per share. When the market price of common stock was $7 per share, Self-...

Q: Rocket Corp. earned net income of $153,040 and

Rocket Corp. earned net income of $153,040 and paid the minimum dividend to preferred stockholders for 2018. Assume that there are no changes in common shares outstanding during 2018. Rocketâ
...

Q: Montel and Jeremy are opening a paint store. There are no

Montel and Jeremy are opening a paint store. There are no competing paint stores in the area. They must decide how to organize the business. They anticipate profits of $350,000 the first year, with th...

Q: Bianchi Company reported these figures for 2018 and 2017:

Bianchi Company reported these figures for 2018 and 2017: Requirements: 1. Compute Bianchi Company’s earnings per share for 2018. Assume the company paid the minimum preferred divi...

Q: Jimmy and Randy are opening a comic store. There are no

Jimmy and Randy are opening a comic store. There are no competing comic stores in the area. They must decide how to organize the business. They anticipate profits of $550,000 the first year, with the...

Q: Refer to the HEB data in Short Exercise S13-16.

Refer to the HEB data in Short Exercise S13-16. Assume the market price of HEB’s common stock is $19.50 per share. Compute HEB’s price/earnings ratio. Short Exercise S13-16: HEB Corporation had net...

Q: Decor and More Imports recently reported the following stockholders’ equity:

Decor and More Imports recently reported the following stockholders’ equity: Suppose Decor and More split its common stock 2-for-1 in order to decrease the market price per share o...

Q: Gullo Company reported these figures for 2018 and 2017:

Gullo Company reported these figures for 2018 and 2017: Requirements: 1. Compute Gullo Company’s earnings per share for 2018. Assume the company paid the minimum preferred dividend...

Q: Accel’s Companies, a home improvement store chain, reported the following

Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requireme...

Q: Data for Oxford State Bank follow: /

Data for Oxford State Bank follow: Evaluate the common stock of Oxford State Bank as an investment. Specifically, use the three stock ratios to determine whether the common stock has increased or de...

Q: Comparative financial statement data of Sanfield, Inc. follow:

Comparative financial statement data of Sanfield, Inc. follow: 1. Market price of Sanfield’s common stock: $51.48 at December 31, 2018, and $37.08 at December 31, 2017. 2. Common s...

Q: Assume that you are purchasing an investment and have decided to invest

Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to Digitalized Corp. and Every Zone, Inc. and have asse...

Q: Comparative financial statement data of Garfield, Inc. follow:

Comparative financial statement data of Garfield, Inc. follow: 1. Market price of Garfield’s common stock: $69.36 at December 31, 2018, and $38.04 at December 31, 2017. 2. Common s...

Q: On July 1, 2011, Davidson Corporation had the following capital

On July 1, 2011, Davidson Corporation had the following capital structure: Common stock (par $3)................... $600,000 Capital in excess of par ......................900,000 Retained earnings.....

Q: Weil Corporation has 80,000 shares of common stock (par

Weil Corporation has 80,000 shares of common stock (par value $8) outstanding. Required: Complete the following comparative tabulation based on two independent cases: Case 1: The board of directors d...

Q: The charter of Vista West Corporation specifies that it may issue 200

The charter of Vista West Corporation specifies that it may issue 200,000 shares of common stock. Since the company was incorporated, it has sold a total of 160,000 shares to the public but bought bac...

Q: At December 31, 2011, the records of NCIS Corporation provided

At December 31, 2011, the records of NCIS Corporation provided the following selected and incomplete data: Common stock (par $10; no changes during the year). Shares authorized, 200,000. Shares issued...

Q: Cardinal Company purchased, as a long-term investment, some

Cardinal Company purchased, as a long-term investment, some of the 200,000 shares of the outstanding common stock of Arbor Corporation. The annual accounting period for each company ends December 31....

Q: For each of the transactions in AP12-4, indicate how

For each of the transactions in AP12-4, indicate how the operating activities and investing activities sections of the cash flow statement (indirect method) will be affected. Information from AP12-4...

Q: During January 2011, Pentagon Company purchased 12,000 shares of

During January 2011, Pentagon Company purchased 12,000 shares of the 200,000 outstanding common shares (no-par value) of Square Corporation at $25 per share. This block of stock was purchased as a lon...

Q: On January 1, 2012, Sheena Company purchased 30 percent of

On January 1, 2012, Sheena Company purchased 30 percent of the outstanding common stock of Maryn Corporation at a total cost of $660,000. Management intends to hold the stock for the long term. On the...

Q: Gioia Company acquired some of the 65,000 shares of outstanding

Gioia Company acquired some of the 65,000 shares of outstanding common stock (no par) of Tristezza Corporation during 2011 as a long-term investment. The annual accounting period for both companies en...

Q: Company A purchased a certain number of Company B’s outstanding voting shares

Company A purchased a certain number of Company B’s outstanding voting shares at $20 per share as a long-term investment. Company B had outstanding 20,000 shares of $10 par value sto...

Q: Using the data in E12-7, answer the following questions

Using the data in E12-7, answer the following questions. Required: 1. On the current year cash flow statement, how would the investing section of the statement be affected by the preceding transactio...

Q: During 2011, Yale Company acquired some of the 50,000

During 2011, Yale Company acquired some of the 50,000 outstanding shares of the common stock, par $12, of Carol Corporation as available-for-sale investments. The accounting period for both companies...

Q: Using the data in M12-3, assume that Yale Company

Using the data in M12-3, assume that Yale Company purchased the voting stock of Carol Corporation for the trading securities portfolio instead of the available-for-sale securities portfolio. Give the...

Q: Using the following categories, indicate the effects of the transactions listed

Using the following categories, indicate the effects of the transactions listed in M12-3 assuming the securities are available for sale. Use + for increase and − for decrease and ind...

Q: Using the following categories, indicate the effects of the transactions listed

Using the following categories, indicate the effects of the transactions listed in M12-3 assuming the securities are trading securities. Use + for increase and − for decrease and ind...

Q: During 2011, Bradford Company purchased some of the 90,000

During 2011, Bradford Company purchased some of the 90,000 shares of common stock, par $6, of Hall,Inc., as a long-term investment. The annual accounting period for each company ends December 31. Thef...

Q: Winter Corporation has just completed its comparative statements for the year ended

Winter Corporation has just completed its comparative statements for the year ended December 31, 2012. At this point, certain analytical and interpretive procedures are to be undertaken. The completed...

Q: Match each ratio or percentage with its computation. /

Match each ratio or percentage with its computation.

Q: Refer to the financial statements of American Eagle (Appendix B)

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 t...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Starbucks for Years +1 through +5. In this portion of the Starbucks Integrative Case, we use the projected financial statements from Int...

Q: In 2000, Enron enjoyed remarkable success in the capital markets.

In 2000, Enron enjoyed remarkable success in the capital markets. During that year, Enron’s shares increased in value by 89%, while the S&P 500 index fell by 9%. At the end of 2000, Enron’s shares wer...

Q: The Coca-Cola Company is a global soft-drink beverage

The Coca-Cola Company is a global soft-drink beverage company that is a primary and direct competitor with PepsiCo. The data in Chapter 12 Exhibits 12.14–12.16 include the actual amo...

Q: We projected financial statements for Walmart Stores for Years þ1 through +

We projected financial statements for Walmart Stores for Years þ1 through +5. The data in Chapter 12 Exhibits 12.17–12.19 include the actual amounts for 2012 and the p...

Q: Ferguson Metals is a decentralized mining, smelting, and metals company

Ferguson Metals is a decentralized mining, smelting, and metals company with three divisions: mining, lead, and copper. The mining division owns the ore mine that produces the lead and copper that occ...

Q: Microelectronics is a large electronics firm with multiple divisions. The circuit

Microelectronics is a large electronics firm with multiple divisions. The circuit board division manufactures circuit boards, which it sells externally and internally. The phone division assembles cel...

Q: US Copiers manufactures a full line of copiers including desktop models.

US Copiers manufactures a full line of copiers including desktop models. The Small Copier Division (SCD) manufactures desktop copiers and sells them in the United States. A typical model has a retail...

Q: Pop Corporation exchanged 40,000 previously unissued no par common shares

Pop Corporation exchanged 40,000 previously unissued no par common shares for a 40 percent interest in Son Corporation on January 1, 2016. The assets and liabilities of Son on that date (after the exc...

Q: Pop Corporation owns 300,000 of 360,000 outstanding shares

Pop Corporation owns 300,000 of 360,000 outstanding shares of Son Corporation, and its $8,700,000 Investment in Son account balance on December 31, 2016, is equal to the underlying equity interest in...

Q: On January 2, 2016, Pam Corporation issues its own $

On January 2, 2016, Pam Corporation issues its own $10 par common stock for all the outstanding stock of Sun Corporation in an acquisition. Sun is dissolved. In addition, Pam pays $40,000 for register...

Q: Sulphur Ridge Mining is considering the development of a new calonium mine

Sulphur Ridge Mining is considering the development of a new calonium mine at Moose Bend in northern Alberta. The mine would require an upfront investment of $110 million and would produce 100,000 ton...

Q: Construct a simple example to show the following: a.

Construct a simple example to show the following: a. Existing shareholders are made worse off when a company makes a cash offer of new stock below the market price. b. Existing shareholders are not m...

Q: Refer to the Marvin Prospectus Appendix at the end of this chapter

Refer to the Marvin Prospectus Appendix at the end of this chapter to answer the following questions. a. If there is unexpectedly heavy demand for the issue, how many extra shares can the underwriter...

Q: Executive Chalk is financed solely by common stock and has outstanding 25

Executive Chalk is financed solely by common stock and has outstanding 25 million shares with a market price of $10 a share. It now announces that it intends to issue $160 million of debt and to use t...

Q: Executive Cheese has issued debt with a market value of $100

Executive Cheese has issued debt with a market value of $100 million and has outstanding 15 million shares with a market price of $10 a share. It now announces that it intends to issue a further $60 m...

Q: Look at Table 24.1:
a

Look at Table 24.1:
a. Suppose the debenture was issued on September 1, 1992, at 99.489%. How much would you have to pay to buy one bond delivered on September 15? Don’t forget to include accrued i...

Q: Maple Aircraft has issued a 4¾% convertible subordinated debenture due 2020

Maple Aircraft has issued a 4¾% convertible subordinated debenture due 2020. The conversion price is $47.00 and the debenture is callable at 102.75% of face value. The market price of the convertible...

Q: U.S. Die Casting, Inc., is a closely

U.S. Die Casting, Inc., is a closely held Ohio corporation that owns 5 percent of Security First Corporation, a Delaware corporation. David Slyman is the president of U.S. Die and its sole shareholder...

Q: On December 31, 20X3, Saxe Corporation was merged into Poe

On December 31, 20X3, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its $10 par common stock, with a market price of Chapter 1 Intercorpor...

Q: On January 1, 20X1, Rolan Corporation issued 10,000

On January 1, 20X1, Rolan Corporation issued 10,000 shares of common stock in exchange for all of Sandin Corporation’s outstanding stock. Condensed balance sheets of Rolan and Sandin...

Q: Aspro Division is considered to be an individual reporting unit of

Aspro Division is considered to be an individual reporting unit of Tabor Company. Tabor acquired the division by issuing 100,000 shares of its common stock with a market price of $7.60 each. Tabor ma...

Q: Brk signs a firm sales commitment with Riv. The contract is

Brk signs a firm sales commitment with Riv. The contract is to sell 100,000 widgets deliverable in three months, on January 31, 2017, at the prevailing market price of widgets at that date. On Novembe...

Q: Ins makes sophisticated medical equipment. A key component of the equipment

Ins makes sophisticated medical equipment. A key component of the equipment is Grade A silver. On May 1, 2016, Ins enters into a firm purchase agreement to buy 1,200,000 troy ounces (equal to 100,000...

Q: 1. An inventory loss from a market price decline occurred in

1. An inventory loss from a market price decline occurred in the first quarter, and the decline was not expected to reverse during the fiscal year. However, in the third quarter, the inventory’s marke...

Q: Pop Corporation’s net income for 2016 is $316,000,

Pop Corporation’s net income for 2016 is $316,000, including $160,000 income from Son Corporation, its 80 percent– owned subsidiary. The income from Son consists of $176,000 equity in income less $16,...

Q: The following information is available regarding Pam Corporation and its 80 percent

The following information is available regarding Pam Corporation and its 80 percent–owned subsidiary, Sun Corporation, at and for the year ended December 31, 2016: REQUIRED: Determ...

Q: The income statements of Pop Corporation and its 80 percent–owned

The income statements of Pop Corporation and its 80 percent–owned subsidiary, Son Corporation, for 2016 are as follows: Note: Income from Son is computed as [($26,400 reported inco...

Q: Pop Corporation owns an 80 percent interest in Son Corporation. Throughout

Pop Corporation owns an 80 percent interest in Son Corporation. Throughout 2016, Pop had 20,000 shares of common stock outstanding. Son had the following securities outstanding: â–  10...

Q: Pam Corporation’s net income for 2016 consists of the following:

Pam Corporation’s net income for 2016 consists of the following: ADDITIONAL INFORMATION: 1. Pam has 100,000 shares of common stock, and Sun has 50,000 shares of common and 10,000 s...

Q: The nation of Textilia does not allow imports of clothing. In

The nation of Textilia does not allow imports of clothing. In its equilibrium without trade, a T-shirt costs $20, and the equilibrium quantity is 3 million T-shirts. One day, after reading Adam Smith’...

Q: Angus the sheep farmer sells wool to Barnaby the knitter for $

Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf o...

Q: Athena Company has two divisions. Spartan Division, which has an

Athena Company has two divisions. Spartan Division, which has an investment base of $8,400,000, produces and sells 450,000 units of a product at a market price of $28 per unit. Its variable costs tota...

Q: Refer to the data in Problem 15-29. Division managers

Refer to the data in Problem 15-29. Division managers are evaluated using residual income using a 15 percent cost of capital. In Problem 15-29 Athena Company has two divisions. Spartan Division, whic...

Q: Gage Corporation has two operating divisions in a semiautonomous organizational structure.

Gage Corporation has two operating divisions in a semiautonomous organizational structure. Adams Division, located in the United States, produces a specialized electrical component that is an input to...

Q: Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens

Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens sells the solvent to both U.S. military services and commercial airlines. The solvent is produced in a single pla...

Q: A student makes the following argument: “When a market is

A student makes the following argument: “When a market is in equilibrium, there is no consumer surplus. We know this because in equilibrium, the market price is equal to the price consumers are willin...

Q: The following graph represents the situation of Karl’s Kumquats, a kumquat

The following graph represents the situation of Karl’s Kumquats, a kumquat grower. a. How much profit is Karl earning? b. Does the current situation of Karl’s fir...

Q: Draw a graph showing the market demand and supply curves for corn

Draw a graph showing the market demand and supply curves for corn and the demand curve for the corn produced by one corn farmer. Be sure to indicate the market price and the price the corn farmer rece...

Q: Suppose consumers pay less than the true cost of medical services because

Suppose consumers pay less than the true cost of medical services because a third party, such as an insurance company or the government, pays most of the bill. In the following graph, D1 represents th...

Q: In panel (b) of Figure 12.9 on page

In panel (b) of Figure 12.9 on page 426, Sacha Gillette reduces her output from 40,000 to 25,000 dozen eggs when the price falls to $1.75. At this price and this output level, she is operating at a lo...

Q: Power Corporation purchased 100 percent of the common stock of Snow Corporation

Power Corporation purchased 100 percent of the common stock of Snow Corporation on January 1, 20X2, by issuing 45,000 shares of its $6 par value common stock. The market price of Power’s shares at the...

Q: O’Kelley Co. has outstanding $2 million face amount of 12

O’Kelley Co. has outstanding $2 million face amount of 12% bonds that were issued on January 1, 2002, for $2 million. The 20-year bonds were issued in $1,000 denominations and mature on December 31, 2...

Q: The stockholders’ equity for Lakeside Marina, Inc., on December 31

The stockholders’ equity for Lakeside Marina, Inc., on December 31, 2015, follows: On January 31, 2016, the market price of Lakeside Marina’s common stock was $20...

Q: Portrait People, Inc., is authorized to issue 500,000

Portrait People, Inc., is authorized to issue 500,000 shares of $4 par common stock. The company issued 74,000 shares at $7 per share, and all 74,000 shares are outstanding. When the market price of c...

Q: Century Communications, Inc., began 2016 with 290,000 shares

Century Communications, Inc., began 2016 with 290,000 shares of $1 par common stock issued and outstanding. Beginning Paid-in Capital in Excess of Par—Common was $580,000, and retained earnings was $7...

Q: The stockholders’ equity for Coeur d’Alene Marina, Inc., on December

The stockholders’ equity for Coeur d’Alene Marina, Inc., on December 31, 2015, follows: On May 31, 2016, the market price of Coeur d’Alene Marin...

Q: Akaman Auto, Inc., is authorized to issue 600,000

Akaman Auto, Inc., is authorized to issue 600,000,000 shares of $10 par common stock. The company issued 70,000 shares at $12 per share, and all 70,000 shares are outstanding. When the market price of...

Q: Universal Communications, Inc., began 2016 with 340,000 shares

Universal Communications, Inc., began 2016 with 340,000 shares of $1 par common stock issued and outstanding. Beginning Paid-in Capital in Excess of Par—Common was $590,000, and Retained Earnings was...

Q: Suppose Nolan, Inc., has common stock, $8 par

Suppose Nolan, Inc., has common stock, $8 par, 500,000 shares authorized, 120,000 shares issued and outstanding. The company also has Paid-in Capital in Excess of Par, common of $225,000 and Retained...

Q: You just started a summer internship with the successful management consulting firm

You just started a summer internship with the successful management consulting firm of Kirk, Spock, and McCoy. Your first day on the job was a busy one, as the following problems were presented to you...

Q: The financial report of Montefiore Medical Center, which operates a major

The financial report of Montefiore Medical Center, which operates a major New York City hospital, included the following item in a summary of long‐term debt outstanding (dates change...

Q: A hospital has outstanding $100 million of bonds that mature in

A hospital has outstanding $100 million of bonds that mature in 20 years (40 periods). The debt was issued at par and pays interest at a rate of 6 percent (3 percent per period). Prevailing rates on c...

Q: Select the best answer. 1. Which of the

Select the best answer. 1. Which of the following items is least likely to appear on the balance sheet of a capital projects fund? a. Cash b. Investments c. Construction in process d. Reserve for enc...

Q: How do shareholders earn returns from investing in stocks? How is

How do shareholders earn returns from investing in stocks? How is the market value of a firm determined? What determines the market price of a stock?

Q: This case focuses on the financial statement analysis of Columbia Sportswear.

This case focuses on the financial statement analysis of Columbia Sportswear. Recall from this chapter that stakeholders use numerous ways to analyze and so better understand the financial position an...

Q: Thompson Manufacturing has been in business for over 50 years, making

Thompson Manufacturing has been in business for over 50 years, making a variety of consumer electronics products. Mary Felix recently joined the business as vice president of the Conley division, one...

Q: Marlys Consolidated has several divisions, two of which transfer their products

Marlys Consolidated has several divisions, two of which transfer their products to other divisions. The Mining division refines toldine, which it then transfers to the Metals division. The Metals divi...

Q: Parkside, Inc. has several divisions that operate as decentralized profit

Parkside, Inc. has several divisions that operate as decentralized profit centers. Parkside’s Entertainment division manufactures handheld gaming systems using the products of two of...

Q: Pet Designs makes various accessories for pets. Their trademark product,

Pet Designs makes various accessories for pets. Their trademark product, PetBed, is perceived to be high quality but not extravagant, and is sold in a variety of pet stores. Wanda Foster, marketing ma...

Q: Delta Telecom, Inc., which produces telecommunications equipment in the United

Delta Telecom, Inc., which produces telecommunications equipment in the United States, has a very strong local market for its circuit board. The variable production cost is $390, and the company can s...

Q: Redstone Industrial Resources Company (RIRC) has several divisions. However

Redstone Industrial Resources Company (RIRC) has several divisions. However, only two divisions transfer products to other divisions. The Mining Division refines toldine, which is then transferred to...

Q: Ro It has been argued that by the time financial statements are

Ro It has been argued that by the time financial statements are issued, the market price of shares already reflects the information contained in them; hence, accounting information is not relevant. Th...

Q: On January 1, 2016, as an incentive to improved performance

On January 1, 2016, as an incentive to improved performance of duties, Recycling Corporation adopted a qualified stock option plan to grant corporate executives nontransferable stock options to 500,00...

Q: The following Statement of Cash Flows was prepared for the Baines Corporation

The following Statement of Cash Flows was prepared for the Baines Corporation. Baines Corporation Statement of Sources and Uses of Cash Year Ended December 31, 2017 Sources of cash Net i...

Q: On April 1, 2017, Janine Corporation sold some of its

On April 1, 2017, Janine Corporation sold some of its five‐year, $1,000 face value, 12 percent term bonds dated March 1, 2017, at an effective annual interest rate (yield) of 10 percent. Interest is p...

Q: Growth Corporation offered the following stock option plan to its employees:

Growth Corporation offered the following stock option plan to its employees: Each employee will receive 1,000 options to purchase shares of stock at an option price equal to the market price of the co...

Q: Arts Corporation offers a generous employee compensation package that includes employee stock

Arts Corporation offers a generous employee compensation package that includes employee stock options. The exercise price has always been equal to the market price of the stock at the date of grant. T...

Q: Garcia Co. has the following available-for-sale securities

Garcia Co. has the following available-for-sale securities outstanding on December 31, 2016 (its first year of operations). Cost Fair Value Rossi Corp. Stock $20,000 $19,000 Barker Compa...

Q: What is the total cash the Ayer Corporation would receive if it

What is the total cash the Ayer Corporation would receive if it issues 1,000 shares of $.02 par value per share common stock at a $9 market price per share? Issue 2 The Waltham Corporation is authoriz...

Q: On October 10, 2016, Mason Engineering Company completed negotiations on

On October 10, 2016, Mason Engineering Company completed negotiations on a contract for the purchase of new equipment. Under the terms of the agreement, the equipment may be purchased now or Mason may...

Q: On October 1, 2017, Harvey Company adopted a stock-

On October 1, 2017, Harvey Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted on...

Q: Define each of the following terms: a. Proxy

Define each of the following terms: a. Proxy; proxy fight; preemptive right; classified stock; founders’ shares b. Estimated value / market price / c. Required rate of return, / expected rate of r...

Q: A call option on the stock of Bedrock Boulders has a market

A call option on the stock of Bedrock Boulders has a market price of $7. The stock sells for $30 a share, and the option has a strike price of $25 a share. What is the exercise value of the call optio...

Q: Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is

Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of...

Q: The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest

The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. a. What is the yield to maturi...

Q: Arnot International’s bonds have a current market price of $1,

Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 year...

Q: On the day an IPO comes out, the market price can

On the day an IPO comes out, the market price can rise above the offering price or fall below that price. Is it more common for the market price to close above or below the offering price on the day o...

Q: The Tsetsekos Company was planning to finance an expansion. The principal

The Tsetsekos Company was planning to finance an expansion. The principal executives of the company all agreed that an industrial company such as theirs should finance growth by means of common stock...

Q: The Howland Carpet Company has grown rapidly during the past 5 years

The Howland Carpet Company has grown rapidly during the past 5 years. Recently, its commercial bank urged the company to consider increasing its permanent financing. Its bank loan under a line of cred...

Q: O’Kelley Co. has outstanding $2 million face amount of 12

O’Kelley Co. has outstanding $2 million face amount of 12% bonds that were issued on January 1, 2002, for $2 million. The 20-year bonds were issued in $1,000 denominations and mature on December 31, 2...

Q: Find a list of common stock exdividend date data. (You

Find a list of common stock exdividend date data. (You can go, via Google, to stocks—wsj.com. Select the reference which is labeled Market Data Center; then select the stocks and trading statistics ta...

Q: Assume that you own 500 shares of $10 par value common

Assume that you own 500 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $40. Required: a. How many shares of common stoc...

Q: Blanker, Inc., has paid a regular quarterly cash dividend of

Blanker, Inc., has paid a regular quarterly cash dividend of $0.50 per share for several years. The common stock is publicly traded. On February 21 of the current year, Blanker’s board of directors de...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: Enter the following column headings across the top of a sheet of

Enter the following column headings across the top of a sheet of paper: Enter the transaction letter in the first column and show the effect (if any) of each of the following transactions on each fi...

Q: This problem is based on the 2008 annual report of Intel Corporation

This problem is based on the 2008 annual report of Intel Corporation in the appendix. Find in the Selected Financial Data (also known as the Five-Year Financial Summary), or calculate, the following d...

Q: You should also review the solution to Case 4.26 on

You should also review the solution to Case 4.26 on the Web site for this text at www.mhhe.com/marshall9e before attempting to complete this case.) Case 4.26: Gerrard Construction Co. is an excavati...

Q: Presented here are summarized data from the balance sheets and income statements

Presented here are summarized data from the balance sheets and income statements of Wiper, Inc.: Required: a. Calculate return on investment, based on net income and average total assets, for 2011 a...

Q: Canton Company, a manufacturer of digital cameras, is considering entry

Canton Company, a manufacturer of digital cameras, is considering entry into the digital binocular market. Canton Company currently does not produce binoculars of any style, so this venture would requ...

Q: Rainbow Cruises operates a week-long cruise tour through the Hawaiian

Rainbow Cruises operates a week-long cruise tour through the Hawaiian Islands. Passengers currently pay $1,800 for a two-person cabin, which is an all-inclusive price that includes food, beverages, an...

Q: Answer the following multiple-choice questions: a. The

Answer the following multiple-choice questions: a. The following relate to Owens data in 2012. What is the ending inventory? Purchases …………………………..$580,000 Beginning inventory……………. 80,000 Purchase r...

Q: Insurance companies tend to have a stock market price at a discount

Insurance companies tend to have a stock market price at a discount to the average market price (price/ earnings ratio). Indicate some perceived reasons for this relatively low price/earnings ratio.

Q: For many years, Lehigh Corporation has used a straightforward cost-

For many years, Lehigh Corporation has used a straightforward cost-plus pricing system, marking its goods up approximately 25 percent of total cost. The company has been profitable; however, it has re...

Q: For each of the following transactions of Dennen, Inc., for

For each of the following transactions of Dennen, Inc., for the month of January, indicate the accounts, the amounts, and the direction of the effects on the accounting equation. A sample is provided....

Q: For each transaction in Mini Exercise 5 (including the sample),

For each transaction in Mini Exercise 5 (including the sample), write the journal entry in the proper form. Data from Mini Exercise 5: For each of the following transactions of Dennen, Inc., for the...

Q: The following events occurred for Johnson Company: a. Received

The following events occurred for Johnson Company: a. Received investment of cash by organizers and distributed to them 1,000 shares of $1 par value common stock with a market price of $40 per share....

Q: Kelsey Baker founded GolfDeals.com at the beginning of February.

Kelsey Baker founded GolfDeals.com at the beginning of February. GolfDeals.com sells new and used golf equipment online. The following events occurred in February. a. Borrowed $30,000 cash from a bank...

Q: For the transactions in Mini Exercise 5 (including the sample),

For the transactions in Mini Exercise 5 (including the sample), identify each as an investing (I) activity or financing (F) activity on the statement of cash flows. Data from Mini Exercise 5: For each...

Q: Smolira Golf Corp. has 25,000 shares of common stock

Smolira Golf Corp. has 25,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2009 was $43. What is the price–earnings ratio? What are the...

Q: When is the negotiated price approach preferred over the market price approach

When is the negotiated price approach preferred over the market price approach in setting transfer prices?

Q: Garcon Inc. manufactures electronic products, with two operating divisions,

Garcon Inc. manufactures electronic products, with two operating divisions, the Consumer and Commercial divisions. Condensed divisional income statements, which involve no intracompany transfers and i...

Q: The income statement, statement of retained earnings, and balance sheet

The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: Somerville Company Statement of Retained Earnings For the Year Ended December 31, 2014 B...

Q: Rebert Inc. showed the following balances for last year:

Rebert Inc. showed the following balances for last year: Rebert’s net income for last year was $3,182,000. Also, assume that the market price per share for Rebert is $51.50. Requ...

Q: Division A manufactures an aircraft engine component with unit variable product cost

Division A manufactures an aircraft engine component with unit variable product cost of $38 and market price of $50. Division A incurs shipping costs of $3 per unit for sales to outside parties only....

Q: Division A manufactures an aircraft engine component with unit variable product cost

Division A manufactures an aircraft engine component with unit variable product cost of $38 and market price of $50. Division A incurs shipping costs of $3 per unit for sales to outside parties only....

Q: Burt Inc. has a number of divisions, including the Indian

Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20-model pump that can...

Q: Mike Sanders is considering the purchase of Kepler Company, a firm

Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been giv...

Q: Albion Inc. provided the following information for its most recent year

Albion Inc. provided the following information for its most recent year of operation. The tax rate is 40%. Required: 1. Compute the following: (a) return on sales, (b) return on assets, (c) return o...

Q: Suppose that you are considering investing in one of two companies,

Suppose that you are considering investing in one of two companies, each in the same industry. The most recent income statements for each company and other relevant information are as follows: Requi...

Q: The following information has been gathered for Malette Manufacturing:

The following information has been gathered for Malette Manufacturing: Required: 1. Compute the return on assets. 2. Compute the return on common stockholders’ equity. 3. Compute t...

Q: Rebert Inc. showed the following balances for last year:

Rebert Inc. showed the following balances for last year: Rebert’s net income for last year was $3,182,000. Also, assume that the dividends paid to common stockholders for last yea...

Q: Luana pays $40 per share for 100 shares of Manano Corporation

Luana pays $40 per share for 100 shares of Manano Corporation common stock. At the end of the year, the market price of the stock is $60 per share. During the year, she receives a cash dividend of $...

Q: One of the earliest frauds during the late 1990s and early 2000s

One of the earliest frauds during the late 1990s and early 2000s was at Sunbeam. The SEC alleged in its charges against Sunbeam that top management engaged in a scheme to fraudulently misrepresent Sun...

Q: As interest rates in the market change over time, the market

As interest rates in the market change over time, the market price of bonds rises and falls. The change in the value of bonds due to changes in interest rates is a risk incurred by bond investors. Wha...

Q: A company has just announced a 3-for-1 stock

A company has just announced a 3-for-1 stock split, effective immediately. Prior to the split, the company had a market value of $5 billion with 100 million shares outstanding. Assuming that the split...

Q: Given the following information: XY Inc. 5% bond

Given the following information: XY Inc. 5% bond AB Inc. 14% bond Both bonds are for $1,000, mature in 20 years, and are rated AAA. a) What should be the current market price of each bond if the inter...

Q: Ball Corporation purchased 30 percent of Krown Company’s common stock on January

Ball Corporation purchased 30 percent of Krown Company’s common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The f...

Q: Fran Corporation acquired all outstanding $10 par value voting common stock

Fran Corporation acquired all outstanding $10 par value voting common stock of Brey Inc. on January 1, 20X9, in exchange for 25,000 shares of its $20 par value voting common stock. On December 31, 20X...

Q: Paramount Medical Services has two outpatient clinics and a pathology laboratory,

Paramount Medical Services has two outpatient clinics and a pathology laboratory, which are organized as separate profit centers. When the pathology laboratory conducts tests ordered by the clinics, t...

Q: The City of Medina Park operates a plumbing and electrical maintenance department

The City of Medina Park operates a plumbing and electrical maintenance department, responsible for maintaining all water and electric service functions in buildings owned by the city. The city adminis...

Q: Explain the advantages of using market price as a transfer price.

Explain the advantages of using market price as a transfer price.

Q: On January 1 of the current year, Sheena Company purchased 30

On January 1 of the current year, Sheena Company purchased 30 percent of the outstanding common stock of Maryn Corporation at a total cost of $485,000. Management intends to hold the stock for the lon...

Q: Using the financial information presented in Exhibit 13.1, calculate

Using the financial information presented in Exhibit 13.1, calculate the following ratios for The Home Depot: · Net profit margin · Earnings quality · Receiva...

Q: Match each ratio or percentage with its computation. /

Match each ratio or percentage with its computation.

Q: California Pizza Kitchen opened its first restaurant in Beverly Hills in 1985

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 3...

Q: Match each ratio or percentage with its computation. /

Match each ratio or percentage with its computation.

Q: During December of the current year, James Company acquired some of

During December of the current year, James Company acquired some of the 50,000 outstanding shares of the common stock, par $12, of Andrew Corporation as available-for-sale investments. The accounting...

Q: California Pizza Kitchen opened its first restaurant in Beverly Hills in 1985

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 3...

Q: Using the financial information presented in Exhibit 13.1, calculate

Using the financial information presented in Exhibit 13.1, calculate the following ratios for The Home Depot: · Net profit margin · Earnings quality · Receiva...

Q: Refer to the financial statements of American Eagle Outfitters in Appendix B

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: Req...

Q: Service Corporation has the following capital stock outstanding at the end of

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 o...

Q: On July 1, Davidson Corporation had the following capital structure:

On July 1, Davidson Corporation had the following capital structure: Common stock ($1 par value) …………â€&brvba...

Q: At the end of the year, the records of NCIS Corporation

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...

Q: On January 1, Biofuel Corporation had the following capital structure:

On January 1, Biofuel Corporation had the following capital structure: Common stock ($0.10 par value) …………â€&...

Q: The charter of Vista West Corporation specifies that it is authorized to

The charter of Vista West Corporation specifies that it is authorized to issue 300,000 shares of common stock. Since the company was incorporated, it has sold a total of 160,000 shares (at $16 per sha...

Q: Refer to the financial statements for Castile Products, Inc., in

Refer to the financial statements for Castile Products, Inc., in Exercise 14–7. In addition to the data in these statements, assume that Castile Products, Inc., paid dividends of $2.10 per share durin...

Q: In the right-hand column below, certain financial ratios are

In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transactio...

Q: Paul Ward is interested in the stock of Pecunious Products, Inc

Paul Ward is interested in the stock of Pecunious Products, Inc. Before purchasing the stock, Mr. Ward would like your help in analyzing the data that are available to him as follows: Mr. Ward would...

Q: Typically, the market price of shares of a company’s stock takes

Typically, the market price of shares of a company’s stock takes a beating when the company announces that it has not met analysts’ expectations. As a result, many companies are under a lot of pressur...

Q: The questions in this exercise are based on Target Corporation. To

The questions in this exercise are based on Target Corporation. To answer the questions, you will need to download Target’s 2004 annual report (the company’s fiscal year ended on January 29, 2005) at...

Q: Wells Company is a pesticide manufacturer. Its sales declined greatly this

Wells Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Wells’ chemical pesticides. During the coming year, W...

Q: The following account balances relate to the stockholders’ equity accounts of Molder

The following account balances relate to the stockholders’ equity accounts of Molder Corp. at year-end. A small stock dividend was declared and issued in 2017. The market price of t...

Q: a. Sparks Corporation has 3,000 shares of 8%,

a. Sparks Corporation has 3,000 shares of 8%, $100 par value preferred stock outstanding at December 31, 2017. At December 31, 2017, the company declared a $105,000 cash dividend. Determine the divide...

Q: Condensed balance sheet and income statement data for Jergan Corporation are presented

Condensed balance sheet and income statement data for Jergan Corporation are presented here. Additional information: 1. The market price of Jergan’s common stock was $7.00, $7.50, a...

Q: The following financial information is for Priscoll Company. /

The following financial information is for Priscoll Company. Additional information: 1. Inventory at the beginning of 2016 was $115,000. 2. Accounts receivable (net) at the beginning of 2016 were $86...

Q: The stockholders’ equity section of Mabry Corporation’s balance sheet consists of common

The stockholders’ equity section of Mabry Corporation’s balance sheet consists of common stock ($8 par) $1,000,000 and retained earnings $300,000. A 10% stock dividend (12,500 shares) is declared when...

Q: On October 31, the stockholders’ equity section of Manolo Company’s balance

On October 31, the stockholders’ equity section of Manolo Company’s balance sheet consists of common stock $648,000 and retained earnings $400,000. Manolo is considering the following two courses of a...

Q: On January 1, 2015, Picard Corporation issued $3,

On January 1, 2015, Picard Corporation issued $3,000,000, 5-year, 8% bonds at 97. The bonds pay interest annually on January 1. By January 1, 2017, the market rate of interest for bonds of risk simila...

Q: On January 1, 2017, Tacoma Corporation had these stockholders’ equity

On January 1, 2017, Tacoma 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...

Q: Emron Inc. is considering these two alternatives to finance its construction

Emron Inc. is considering these two alternatives to finance its construction of a new $2 million plant: 1. Issuance of 200,000 shares of common stock at the market price of $10 per share. 2. Issuance...

Q: Stossel Corporation has 200,000 shares of $10 par value

Stossel Corporation has 200,000 shares of $10 par value common stock out-standing. It declares a 12% stock dividend on December 1 when the market price per share is $17. The dividend shares are issued...

Q: Lee and Jay are discussing how the market price of a bond

Lee and Jay are discussing how the market price of a bond is determined. Lee believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term...

Q: On January 1, 2017, Lenne Corporation had $1,

On January 1, 2017, Lenne Corporation had $1,200,000 of common stock outstanding that was issued at par and retained earnings of $750,000. The company issued 30,000 shares of common stock at par on Ju...

Q: Jayne Corporation has 10,000 shares of $15 par value

Jayne Corporation has 10,000 shares of $15 par value common stock outstanding when it announces a 3-for-1 split. Before the split, the stock had a market price of $120 per share. After the split, how...

Q: Thom Inc.’s common stock has a par value of $

Thom Inc.’s common stock has a par value of $1 and a current market price of $15. Explain why these amounts are different.

Q: Here is the income statement for Myers, Inc. /

Here is the income statement for Myers, Inc. Additional information: 1. Common stock outstanding January 1, 2017, was 32,000 shares, and 40,000 shares were outstanding at December 31, 2017. 2. The ma...

Q: Lake Company reported the following summarized balance sheet data as of December

Lake Company reported the following summarized balance sheet data as of December 31, 20X2: Lake issues 4,000 additional shares of its $10 par value stock to its shareholders as a stock div...

Q: Pound Manufacturing Corporation prepared the following balance sheet as of January 1

Pound Manufacturing Corporation prepared the following balance sheet as of January 1, 20X8: The company is considering a 2-for-1 stock split, a stock dividend of 4,000 shares, or a stock divide...

Q: A firm has 10 million shares outstanding with a market price of

A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has...

Q: For each of the determinants of demand in Equation 2.1

For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for e...

Q: At December 31, 2012, Ashley Co. has outstanding purchase

At December 31, 2012, Ashley Co. has outstanding purchase commitments for 150,000 gallons, at $6.20 per gallon, of a raw material to be used in its manufacturing process. The company prices its raw ma...

Q: At December 31, 2013, Volkan Company has outstanding noncancelable purchase

At December 31, 2013, Volkan Company has outstanding noncancelable purchase commitments for 40,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The company pr...

Q: Logan Industries purchased the following assets and constructed a building as well

Logan Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2 These assets were purchased as a lump sum for $104,000 ca...

Q: Shabbona Corporation operates a retail computer store. To improve delivery services

Shabbona Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2012. The terms of acquisition for each truck are de...

Q: Selected accounts included in the property, plant, and equipment section

Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2011, had the following balances. Land ……………………………………………. $ 300,000 Land im...

Q: Which is more favorable to the founders, the Market Price Formula

Which is more favorable to the founders, the Market Price Formula (MPF) or the Conversion Price Formula (CPF)?

Q: Calculate the conversion price formula (CPF) and market price formula

Calculate the conversion price formula (CPF) and market price formula (MPF) prices for an offering involving an existing conversion price of $1, a hypothesized market price of $2, and a new offering p...

Q: The seasonal yield of olives in a Piraeus, Greece, vineyard

The seasonal yield of olives in a Piraeus, Greece, vineyard is greatly influenced by a process of branch pruning. If olive trees are pruned every two weeks, output is increased. The pruning process, h...

Q: Ashley Company is a young and growing producer of electronic measuring instruments

Ashley Company is a young and growing producer of electronic measuring instruments and technical equipment. You have been retained by Ashley to advise it in the preparation of a statement of cash flow...

Q: Matheny Inc. went public 3 years ago. The board of

Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through t...

Q: Messner Co. reported $145,000 of net income for

Messner Co. reported $145,000 of net income for 2012. The accountant, in preparing the statement of cash flows, noted several items occurring during 2012 that might affect cash flows from operating ac...

Q: The following statement was prepared by Maloney Corporation’s accountant.

The following statement was prepared by Maloney Corporation’s accountant. MALONEY CORPORATION STATEMENT OF SOURCES AND APPLICATION OF CASH FOR THE YEAR ENDED SEPTEMBER 30, 2012 Sources of cash Net in...

Q: The transactions below took place during the year 2012. 1

The transactions below took place during the year 2012. 1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market pric...

Q: In August 2007, Heelys, a Texas-based maker of

In August 2007, Heelys, a Texas-based maker of wheeled shoes, reported quarterly profits that beat the street estimates by three cents per share. Upon receiving the news, the market price of Heelys dr...

Q: The president of Charlottetown Inc. has given the managers of the

The president of Charlottetown Inc. has given the managers of the company’s three decentralized divisions (O’Leary, Alberton, and Summerside) the authority to decide whether to sell externally or inte...

Q: The market value of Yeates Corporation’s common stock had become excessively high

The market value of Yeates Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Yeates declared a...

Q: Astro Corporation was started with the issue of 2,000 shares

Astro Corporation was started with the issue of 2,000 shares of $5 par stock for cash on January 1, 2018. The stock was issued at a market price of $12 per share. During 2018, the company earned $31,0...

Q: The stockholders’ equity section of the balance sheet for Mann Equipment Co

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, 2016, is as follows. Note: The market value per share of the common stock is $42, and t...

Q: StatPro has just been presented the following market and production estimates on

StatPro has just been presented the following market and production estimates on Product X27, which has been under development in the company. Use the concept of target costing to integrate the marke...

Q: Forbes annually provides a list of the most valuable companies in the

Forbes annually provides a list of the most valuable companies in the world. The top 10 most valuable companies in the United States, from the 2010 Forbes 2000, follow. As an analyst for a securitie...

Q: Assume that a firm in a perfectly competitive industry has the following

Assume that a firm in a perfectly competitive industry has the following total cost schedule: OUTPUT (UNITS) TOTAL COST ($) 10………………………………………………………… 110 15 …………………...

Q: The Pilot Pen Company has decided to use 15 test markets to

The Pilot Pen Company has decided to use 15 test markets to examine the sensitivity of demand for its new product to various prices, as shown in the following table. Advertising effort was identical i...

Q: Sembotix Company has several divisions including a Semiconductor Division that sells semiconductors

Sembotix Company has several divisions including a Semiconductor Division that sells semiconductors to both internal and external customers. The company’s X-ray Division uses semiconductors as a compo...

Q: Exoplex Industries Inc. is a diversified aerospace company, including two

Exoplex Industries Inc. is a diversified aerospace company, including two operating divisions, Semiconductors and Navigational Systems divisions. Condensed divisional income statements, which involve...

Q: Quest Motors, Inc., operates as a decentralized multidivision company.

Quest Motors, Inc., operates as a decentralized multidivision company. The Vivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost...

Q: The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio

The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio. The company has marketing divisions throughout the world. A Burton marketing division in Lille, France, imports 200,000 chains...

Q: Suppose that the U.S. division could sell as many

Suppose that the U.S. division could sell as many chainsaws as it makes at $225 per unit in the U.S. market, net of all marketing and distribution costs. Required: 1. From the viewpoint of the Burto...

Q: Mountaineer, Inc., has two divisions, A and B,

Mountaineer, Inc., has two divisions, A and B, that manufacture expensive bicycles. Division A produces the bicycle frame, and division B assembles the rest of the bicycle onto the frame. There is a m...

Q: Cran Health Products is a cranberry cooperative that operates two divisions,

Cran Health Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into...

Q: Assume that Pat Borges, CEO of Cran Health, had mandated

Assume that Pat Borges, CEO of Cran Health, had mandated a transfer price equal to 225% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the f...

Q: Express Grow Inc., based in Ankeny, Iowa, sells high

Express Grow Inc., based in Ankeny, Iowa, sells high-end fertilizers. Express Grow has two divisions: â–  North Italy mining division, which mines potash in northern Italy â
...

Q: Cocoa Mill Chocolates manufactures specialty chocolates and sells them to fine candy

Cocoa Mill Chocolates manufactures specialty chocolates and sells them to fine candy stores. The company operates two divisions, cocoa and candy, as decentralized entities. The cocoa division purchase...

Q: Sierra Inc. consists of a semiconductor division and a process-

Sierra Inc. consists of a semiconductor division and a process-control division, each of which operates as an independent profit center. The semiconductor division employs craftsmen who produce two di...

Q: The Cook Company operates a simple chemical process to convert a single

The Cook Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a si...

Q: Lowe’s Companies Inc. (LOW) operates over 1,800

Lowe’s Companies Inc. (LOW) operates over 1,800 home improvement retail stores and is a competitor of The Home Depot (HD). The following data (in millions) were adapted from a recent...

Q: Audrey’s Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Northwest

Audrey’s Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Northwest. Audrey’s Restaurant Corporation, which had 50,000 shares of common stock outstanding, declared a 6-...

Q: Using the data from E8-22, indicate the effects on

Using the data from E8-22, indicate the effects on net assets and EPS of the stock split. Data from Exercise 8-22: Audrey’s Restaurant Corporation wholesales ovens and ranges to restaurants throughou...

Q: On August 7, Easy Up Corporation, a wholesaler of hydraulic

On August 7, Easy Up Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 20,000 shares of $10 par common stock with a current market price of $14. Illustrate the effect on the...

Q: The following information was taken from the financial statements of Monarch Resources

The following information was taken from the financial statements of Monarch Resources Inc. for December 31 of the current year: The net income was $1,300,000, and the declared divide...

Q: Enron Corporation, headquartered in Houston, Texas, provided products and

Enron Corporation, headquartered in Houston, Texas, provided products and services for natural gas, electricity, and communications to wholesale and retail customers. Enron’s operati...

Q: Data on the physical inventory of Moyer Company as of December 31

Data on the physical inventory of Moyer Company as of December 31, 20Y9, are presented below. Quantity and cost data from the last purchases invoice of the year and the next-to the-last purchases in...

Q: Alphabet (formerly known as Google) (GOOG) is a

Alphabet (formerly known as Google) (GOOG) is a technology company that offers users Internet search and e-mail services. Google also developed the Android operating system for use with cell phones an...

Q: The comparative financial statements of Automotive Solutions Inc. are as follows

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8. Instru...

Q: The Home Depot, Inc. (HD) operates over 2

The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe’s (LOW). The following data (in millions) were adapted from recent ï¬...

Q: Time Warner, Inc., the world’s largest media and entertainment company

Time Warner, Inc., the world’s largest media and entertainment company, is best known as the publisher of magazines such as Fortune, Time, People, and Sports Illustrated. The Company is a media powerh...

Q: To many upscale homeowners, no other flooring offers the warmth,

To many upscale homeowners, no other flooring offers the warmth, beauty, and value of wood. New technology in stains and finishes call for regular cleaning that takes little more than sweeping and/or...

Q: In 1998, California’s newly deregulated power market began operation. The

In 1998, California’s newly deregulated power market began operation. The large power utilities in the state turned over control of their electric transmission facilities to the new Independent System...

Q: In Africa, the continent where the polio epidemic has been most

In Africa, the continent where the polio epidemic has been most difficult to control, international relief efforts aimed at disease eradication often work against a backdrop of civil unrest and war. I...

Q: Each year, about 9 billion bushels of corn are harvested in

Each year, about 9 billion bushels of corn are harvested in the United States. The average market price of corn is a little over $2 per bushel, but costs farmers about $3 per bushel. Tax payers make u...

Q: Critics argue that if Congress wants to make the tax code more

Critics argue that if Congress wants to make the tax code more equitable, a good place to start would be removing unfair tariffs and quotas. Today, there are more than eight thousand import tariffs, q...

Q: The Las Vegas Valley Water District (LVVWD) is a not

The Las Vegas Valley Water District (LVVWD) is a not-for-profit agency that began providing water to the Las Vegas Valley in 1954. The District helped build the city's water delivery system and now pr...

Q: The Onondaga County Resource Recovery (OCRRA) system assumed responsibility for

The Onondaga County Resource Recovery (OCRRA) system assumed responsibility for solid waste management on November 1, 1990, for thirty-three of the thirty-five municipalities in Onondaga County, New...

Q: The Organization of the Petroleum Exporting Countries (OPEC) was formed

The Organization of the Petroleum Exporting Countries (OPEC) was formed on September 14, 1960 in Baghdad, Iraq. The current membership is comprised of five founding members plus six others: Algeria, I...

Q: Question: Short-run Firm Supply. Florida is the biggest

Short-run Firm Supply. Florida is the biggest sugar-producing state, but Michigan and Minnesota are home to thousands of sugar beet growers. Sugar prices in the United States average about 20¢ per p...

Q: Question: Short-run Market Supply. New England Textiles,

Short-run Market Supply. New England Textiles, Inc., is a medium-sized manufacturer of blue denim that sells in a perfectly competitive market. Given $25,000 in fixed costs, the total cost function...

Q: Match the items in the left-hand column with the descriptions

Match the items in the left-hand column with the descriptions/explanations in the right-hand column.

Q: Following are seven independent cases on how accounting facts might be reported

Following are seven independent cases on how accounting facts might be reported on an individual company’s interim financial reports. Bean Company was reasonably certain it would have an employe...

Q: Select the correct answer for each of the following questions.

Select the correct answer for each of the following questions. Which of the following is an inherent difficulty in determining the results of operations on an interim basis? Cost of sales r...

Q: At December 31, 2012, Davis Company’s noncurrent operating asset accounts

At December 31, 2012, Davis Company’s noncurrent operating asset accounts had the following balances: Category Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

Q: On January 1, 2013, Denver Company sold land that originally

On January 1, 2013, Denver Company sold land that originally cost $400,000 to Boise Company. As payment, Boise gave Denver a $600,000 note. The note bears an interest rate of 4% and is to be repaid in...

Q: A call option on a non-dividend-paying stock has

A call option on a non-dividend-paying stock has a market price of $212. The stock price is $15, the exercise price is $13, the time to maturity is 3 months, and the risk-free interest rate is 5% per...

Q: The market price of a European call is $3.00

The market price of a European call is $3.00 and its price given by Black–Scholes– Merton model with a volatility of 30% is $3.50. The price given by this Black–Scholes–Merton model for a European put...

Q: On July 1, an investor holds 50,000 shares of

On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month and decides...

Q: Birrell Scientific Inc. manufactures electronic products, with two operating divisions

Birrell Scientific Inc. manufactures electronic products, with two operating divisions, GPS Systems and Communication Systems. Condensed divisional income statements, which involve no i...

Q: Sisel Company has two divisions, the Optic Lens Division and the

Sisel Company has two divisions, the Optic Lens Division and the Camera Division. The Camera Division may purchase lenses from the Optic Lens Division or from outside suppliers. The Optic Lens Divisio...

Q: Rondo Corporation has 430,000 shares of $6 par-

Rondo Corporation has 430,000 shares of $6 par-value common stock issued and outstanding. Record the following entries into the general journal for Rondo:

Q: Racette Corporation has 390,000 shares of $7 par-

Racette Corporation has 390,000 shares of $7 par-value common stock issued and outstanding. Record the following entries into the general journal for Racette:

Q: On July 31, 201X, Carnival Corporation had the following stockholders’

On July 31, 201X, Carnival Corporation had the following stockholders’ equity: Common Stock, $9 par value, authorized 93,000 shares, 62,000 shares issued and outstanding ………………………………………………………………….………...

Q: On July 31, 201X, Lucky Corporation had the following stockholders’

On July 31, 201X, Lucky Corporation had the following stockholders’ equity: Common Stock, $9 par value, authorized 93,000 shares, 63,000 shares issued and outstanding …………………………………………………………….…………….....

Q: : Eaton Company is a pesticide manufacturer. Its sales declined greatly

Eaton Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Eaton’s chemical pesticides. During the coming year,...

Q: Frusciante, Inc., has 290,000 bonds outstanding. The

Frusciante, Inc., has 290,000 bonds outstanding. The bonds have a par value of $1,000, a coupon rate of 7 percent paid semiannually, and 8 years to maturity. The current YTM on the bonds is 7.5 percen...

Q: Sportime Fitness Center, Inc., issued convertible bonds with a conversion

Sportime Fitness Center, Inc., issued convertible bonds with a conversion price of $49. The bonds are available for immediate conversion. The current price of the company’s common stock is $43 per sha...

Q: A warrant with six months until expiration entitles its owner to buy

A warrant with six months until expiration entitles its owner to buy 10 shares of the issuing firm’s common stock for an exercise price of $31 per share. If the current market price of the stock is $1...

Q: You bought a share of 3.5 percent preferred stock for

You bought a share of 3.5 percent preferred stock for $92.07 last year. The market price for your stock is now $96.12. What was your total return for last year?

Q: Jet Black is an international conglomerate with a petroleum division and is

Jet Black is an international conglomerate with a petroleum division and is currently competing in an auction to win the right to drill for crude oil on a large piece of land in one year. The current...

Q: A warrant gives its owner the right to purchase three shares of

A warrant gives its owner the right to purchase three shares of common stock at an exercise price of $64 per share. The current market price of the stock is $68. What is the minimum value of the warra...

Q: The company intends to issue 20-year bonds with a face

The company intends to issue 20-year bonds with a face value of $1,000. The bonds carry a coupon rate of 9%, and interest is paid semiannually. On the issue date, the market interest rate for bonds is...

Q: The company intends to issue 10-year bonds with a face

The company intends to issue 10-year bonds with a face value of $1,000. The bonds carry a coupon rate of 13%, and interest is paid semiannually. On the issue date, the market interest rate for bonds i...

Q: Refer to Practice 13-8. Assume that the stock-

Refer to Practice 13-8. Assume that the stock-based compensation plan involves stock appreciation rights (SARs). At the end of three years, the employees are given a cash award equal to the excess of...

Q: On January 1, Year 1, the company wrote a put

On January 1, Year 1, the company wrote a put option agreeing to purchase 100 shares of its own stock for $50 per share on December 31, Year 2, at the option of the purchaser of the put option. The ma...

Q: On January 1, the company purchased 10,000 shares of

On January 1, the company purchased 10,000 shares of Wilsonville Company stock for $20 per share as an available-for-sale investment. In March, the company decided to distribute the Wilsonville shares...

Q: On January 1, 2012, Obregon Supply Company established a stock

On January 1, 2012, Obregon Supply Company established a stock-based compensation plan for its senior employees. A total of 45,000 options was granted that permit employees to purchase 45,000 shares o...

Q: Phelps Company distributed the following dividends to its stockholders: (

Phelps Company distributed the following dividends to its stockholders: (a) 450,000 shares of Bedrock Corporation stock, carrying value of investment, $975,000; fair market value, $1,350,000. (b) 220,...

Q: Zenon Company has 450,000 shares of $1 par value

Zenon Company has 450,000 shares of $1 par value common stock outstanding. In declaring and distributing a 10% stock dividend, Zenon initially issued only 40,000 new shares; the other stock dividend s...

Q: The Stockholders’ Equity section of Webster Inc. showed the following data

The Stockholders’ Equity section of Webster Inc. showed the following data on December 31, 2012: common stock, $3 par, 300,000 shares authorized, 250,000 shares issued and outstanding, $750,000; paid-...

Q: Globe Corporation, a new environmental control company, initiated a performance

Globe Corporation, a new environmental control company, initiated a performance-based stock option plan for its management on January 1, 2012. The plan provided for the granting of a variable number o...

Q: Morris Corporation is publicly owned, and its shares are traded on

Morris Corporation is publicly owned, and its shares are traded on a national stock exchange. Morris has 16,000 shares of $2 stated value common stock authorized. Only 75% of these shares have been is...

Q: 1. On January 2, 2014, Kine Co. granted

1. On January 2, 2014, Kine Co. granted Morgan, its president, compensatory stock options to buy 1,000 shares of Kine’s $10 par common stock. The options call for a price of $20 per...

Q: A stock warrant entitles the owner to buy a specified number of

A stock warrant entitles the owner to buy a specified number of shares of stock at a specified price. Landon Davis owns 1,000 stock warrants. Each warrant entitles him to buy one share of Plum Street...

Q: On January 1, the company granted 150,000 stock options

On January 1, the company granted 150,000 stock options to key employees. Each option allows an employee to buy one share of $1 par common stock for $25, which was the market price of the shares on th...

Q: Refer to Practice 13-8. Assume that the stock-

Refer to Practice 13-8. Assume that the stock-based compensation plan is performance based. As of the end of the first year, the number of options that are probable to vest is 150,000. At the end of t...

Q: On November 17 of Year 1, the company entered into a

On November 17 of Year 1, the company entered into a commitment to purchase 250,000 ounces of gold on February 14 of Year 2 at a price of $1,110.20 per ounce. On December 31 of Year 1, the market pric...

Q: Assume that the product depicted below generates external costs in consumption of

Assume that the product depicted below generates external costs in consumption of $4 per unit. (a) What is the market price (market value) of the product? (b) Draw the social demand curve. (c) What i...

Q: If the average adult produces $90,000 of output per

If the average adult produces $90,000 of output per year, how much output is lost as a result of adult deaths from secondhand smoke, according to the News on page 74?

Q: Answer the following multiple-choice questions: a. The

Answer the following multiple-choice questions: a. The following relate to Owens data in 2012. What is the ending inventory? Purchases …………………………..$580,000 Beginning inventory……………. 80,000 Purchase r...

Q: Eaton Company is a pesticide manufacturer. Its sales declined greatly this

Eaton Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Eaton’s chemical pesticides. During the coming year,...

Q: : Eaton Company is a pesticide manufacturer. Its sales declined greatly

Eaton Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Eaton’s chemical pesticides. During the coming year,...

Q: A farmer expects to sell 5,000 bushels of corn on

A farmer expects to sell 5,000 bushels of corn on January 1 of Year 2. On December 1 of Year 1, the farmer enters into a futures contract to sell the corn on January 1 of Year 2 at $2.30 per bushel. T...

Q: Refer to the financial statements for Castile Products, Inc., in

Refer to the financial statements for Castile Products, Inc., in Exercise 15–8. In addition to the data in these statements, assume that Castile Products, Inc., paid dividends of $2.10 per share durin...

Q: Plaintiff Simmonds alleged that the defendant investment banks violated Section 16(

Plaintiff Simmonds alleged that the defendant investment banks violated Section 16(b) of the Securities Exchange Act by engaging in short-swing transactions with 54 defendant issuing companies. Simmon...

Q: On November 4, Kim contracted to sell to Lynn five hundred

On November 4, Kim contracted to sell to Lynn five hundred sacks of flour at $4 each to be delivered to Lynn by December 12. On November 27, Kim shipped the flour. By December 5, when the shipment arr...

Q: Farley and Trudy entered into a written contract whereby Farley agreed to

Farley and Trudy entered into a written contract whereby Farley agreed to sell and Trudy agreed to buy 6,000 bushels of wheat at $10.33 per bushel, deliverable at the rate of 1,000 bushels a month com...

Q: Courts Distributors needed 200 compact refrigerators on a rush basis. It

Courts Distributors needed 200 compact refrigerators on a rush basis. It contacted Eastinghouse Corporation, a manufacturer of refrigerators. Eastinghouse said it would take some time to quote a price...

Q: Victor Packing Co. (Victor) contracted to supply Sun Maid

Victor Packing Co. (Victor) contracted to supply Sun Maid Raisin Growers 1,800 tons of raisins from the current year’s crop. After delivering 1,190 tons of raisins by August, Victor refused to supply...

Q: Technical Textile agreed by written contract to manufacture and sell 20,

Technical Textile agreed by written contract to manufacture and sell 20,000 pounds of yarn to Jagger Brothers at a price of $2.15 per pound. After Technical had manufactured, delivered, and been paid...

Q: Teledyne Industries, Inc., entered into a contract with Teradyne,

Teledyne Industries, Inc., entered into a contract with Teradyne, Inc., to purchase a T-347A transistor test system for the list and fair market price of $98,400 less a discount of $984. After the sys...

Q: The shareholders of Endicott Johnson who had dissented from a proposed merger

The shareholders of Endicott Johnson who had dissented from a proposed merger of Endicott with McDonough Corporation brought a proceeding to fix the fair value of their stock. At issue was the proper...

Q: During a period of a few years, intense price competition characterized

During a period of a few years, intense price competition characterized both the retail and the wholesale oil markets. At times, prices in the wholesale market fell below the manufacturer’s cost. One...

Q: Wilcox, chief executive officer and chairman of the board of directors

Wilcox, chief executive officer and chairman of the board of directors, owned 60 percent of the shares of Sterling Corporation. When the market price of Sterling’s shares was $22 per share, Wilcox sol...

Q: Kellner Company is a pesticide manufacturer. Its sales declined greatly this

Kellner Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Kellner’s chemical pesticides. In the coming year,...

Q: United First Bank, the nationwide banking company, owns many types

United First Bank, the nationwide banking company, owns many types of investments. Assume that United First Bank paid $700,000 for trading securities on December 3. Two weeks later United First Bank r...

Q: Northern Corporation, the investment banking company, often has extra cash

Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 800 shares of Andy, Inc., stock at $54 per share. Assume Northern expects to hold the Andy s...

Q: River Corporation, the investment banking company, often has extra cash

River Corporation, the investment banking company, often has extra cash to invest. Suppose River buys 600 shares of Eathen, Inc., stock at $40 per share. Assume River expects to hold the Eathen stock...

Q: Pecunious Products, Inc.’s financial results for the past three

Pecunious Products, Inc.’s financial results for the past three years are summarized below: Your boss has asked you to review these results and then answer the following questions:...

Q: Stavos Company’s Screen Division manufactures a standard screen for high-definition

Stavos Company’s Screen Division manufactures a standard screen for high-definition televisions (HDTVs). The cost per screen is: Variable cost per screen…â...

Q: Refer to the financial statements for Castile Products, Inc., in

Refer to the financial statements for Castile Products, Inc., in Exercise 15–8. In addition to the data in these statements, assume that Castile Products, Inc., paid dividends of $2.10 per share durin...

Q: You run a regression of monthly returns of Mapco, an oil

You run a regression of monthly returns of Mapco, an oil- and gas-producing firm, on the S&P 500 Index and come up with the following output for the period 1991–1995. Intercept of the regression = 0.0...

Q: Assume that SmallTech has net income of $1 million and that

Assume that SmallTech has net income of $1 million and that the earnings will increase in proportion with the additional capital raised. a. Estimate the earning per share that SmallTech will have afte...

Q: As CEO of a major corporation, you have to make a

As CEO of a major corporation, you have to make a decision on how much you can afford to borrow. You currently have 10 million shares outstanding, and the market price per share is $50. You also curre...

Q: Plastico, a manufacturer of consumer plastic products, is evaluating its

Plastico, a manufacturer of consumer plastic products, is evaluating its capital structure. The balance sheet of the company is as follows (in millions): In addition, you are provided the following in...

Q: GenCorp, an automotive parts manufacturer, currently has $25 million

GenCorp, an automotive parts manufacturer, currently has $25 million in outstanding debt and has 10 million shares outstanding. The book value per share is $10, and the market price per share is $25....

Q: You have been called in as a consultant for Herbert’s a sporting

You have been called in as a consultant for Herbert’s a sporting goods retail firm, which is examining its debt policy. The firm currently has a balance sheet as follows: The firm&ac...

Q: Which of the following statements are true regarding dividends? ______

Which of the following statements are true regarding dividends? ______ 1. Cash and stock dividends reduce retained earnings. ______ 2. Dividends payable is recorded at the time a cash dividend is decl...

Q: Refer to the information in QS 14-19 for Vodafone Group

Refer to the information in QS 14-19 for Vodafone Group Plc. The following price quotes (from Yahoo! Finance Bond Center) relate to its bonds payable. The price quote indicates that the 4.625% bonds h...

Q: Hiker Company completes the following transactions during the current year. Prepare

Hiker Company completes the following transactions during the current year. Prepare the May 9 and June 2 journal entries and the December 31 adjusting entry. This is the first and only time the compan...

Q: Explain the relationship between earnings per share, projected earnings, and

Explain the relationship between earnings per share, projected earnings, and the market price for a share of stock.

Q: Real Cool produces two different models of air conditioners. The company

Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly i...

Q: Refer to the information in Exercise C-1 to answer the

Refer to the information in Exercise C-1 to answer the following requirements. 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each pro...

Q: Consider the following data for two products of Vigano Manufacturing.

Consider the following data for two products of Vigano Manufacturing. 1. Using direct labor hours as the basis for assigning overhead costs, determine the total production cost per unit for each pro...

Q: Tent Master produces two lines of tents sold to outdoor enthusiasts.

Tent Master produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B the tents are sewn and folded. The activities, costs, and driv...

Q: 1.1. Consumer surplus equals minus . 1.

1.1. Consumer surplus equals minus . 1.2. Producer surplus equals minus . 1.3. In Figure 21.1, Tupak’s consumer surplus is , co...

Q: 2.1. Economic profit equals minus . 2.

2.1. Economic profit equals minus . 2.2. Economic cost equals cost plus cost. 2.3. For a perfectly competitive firm, marginal revenue equals , and...

Q: 3.1. A firm will not shut down in the

3.1. A firm will not shut down in the long run as long as its revenue is (larger/smaller) than the firm’s variable cost. 3.2. Your firm has a total revenue of $500, a...

Q: 1.1. There is asymmetric information in the used-

1.1. There is asymmetric information in the used-car market because (buyers/sellers) cannot distinguish between lemons and plums but (buyers/sellers) can. 1.2. The supply cur...

Q: Kosco CD Company has had 4 years of record earnings. Due

Kosco CD Company has had 4 years of record earnings. Due to this success, the market price of its 400,000 shares of $2 par value common stock has increased from $6 per share to $50. During this period...

Q: Fugate Inc. is considering these two alternatives to finance its construction

Fugate Inc. is considering these two alternatives to finance its construction of a new $2 million plant: 1. Issuance of 200,000 shares of common stock at the market price of $10 per share. 2. Issuance...

Q: On January 1, 2012, Kenard Corporation issued $3,

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 simila...

Q: On January 1, 2012, Kenard Corporation issued $3,

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 simila...

Q: Question: On January 1, 2014, Everett Corporation had these

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 Val...

Q: The following account balances relate to the stockholders’ equity accounts of Smoltz

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...

Q: Condensed balance sheet and income statement data for Jernigan Corporation are presented

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....

Q: The following financial information is for Frizell Company. /

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...

Q: The stockholders’ equity accounts of Warden Corporation on January 1, 2014

The stockholders’ equity accounts of Warden Corporation on January 1, 2014, were as follows. Preferred Stock (9%, $50 par cumulative, 10,000 shares authorized) …………$ 200,000 Common Stock ($1 stated v...

Q: On January 1, 2014, Lamar Corporation had these stockholders’ equity

On January 1, 2014, Lamar Corporation had these stockholders’ equity accounts. Common Stock ($20 par value, 80,000 shares issued and outstanding) ………. $1,600,000 Paid-in Capital in Excess of Par Val...

Q: The condensed balance sheet and income statement data for Symbiosis Corporation are

The condensed balance sheet and income statement data for Symbiosis Corporation are presented below. Additional information: 1. The market price of Symbiosis common stock was $5.00, $3.50, and $2.80...

Q: Financial information for Bradford Company is presented here. /

Financial information for Bradford Company is presented here. Additional information: 1. Inventory at the beginning of 2013 was $330,000. 2. Accounts receivable at the beginning of 2013 were $80,000...

Q: Deane Corporation has 10,000 shares of $15 par value

Deane Corporation has 10,000 shares of $15 par value common stock outstanding when it announces a 3-for-1 split. Before the split, the stock had a market price of $120 per share. After the split, how...

Q: Hatch Inc.’s common stock has a par value of $

Hatch Inc.’s common stock has a par value of $1 and a current market price of $15. Explain why these amounts are different.

Q: The stockholders’ equity section of Maley Corporation’s balance sheet consists of common

The stockholders’ equity section of Maley Corporation’s balance sheet consists of common stock ($8 par) $1,000,000 and retained earnings $300,000. A 10% stock dividend (12,500 shares) is declared when...

Q: On October 31, the stockholders’ equity section of Pele Company’s balance

On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of common stock $648,000 and retained earnings $400,000. Pele is considering the following two courses of actio...

Q: Jack and Lance are discussing how the market price of a bond

Jack and Lance are discussing how the market price of a bond is determined. Jack believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the...

Q: Jack and Lance are discussing how the market price of a bond

Jack and Lance are discussing how the market price of a bond is determined. Jack believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the...

Q: On January 1, 2014, Wilkens Corporation had $1,

On January 1, 2014, Wilkens Corporation had $1,200,000 of common stock outstanding that was issued at par and retained earnings of $750,000. The company issued 30,000 shares of common stock at par on...

Q: Here is the income statement for Eberle, Inc. EBERLE

Here is the income statement for Eberle, Inc. EBERLE, INC. Income Statement For the Year Ended December 31, 2014 Sales revenue ……………………………………………………………………………………. $400,000 Cost of goods sold ……………………………...

Q: Gast Corporation has 200,000 shares of $10 par value

Gast Corporation has 200,000 shares of $10 par value common stock outstanding. It declares a 12% stock dividend on December 1 when the market price per share is $17. The dividend shares are issued on...

Q: The windshield division of Fast Car Co. makes windshields for use

The windshield division of Fast Car Co. makes windshields for use in Fast Car’s assembly division. The windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000...

Q: The windshield division of Fast Car Co. makes windshields for use

The windshield division of Fast Car Co. makes windshields for use in Fast Car’s assembly division. The windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000...

Q: While reviewing the March 31, 2016, balance sheet of Business

While reviewing the March 31, 2016, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement show...

Q: United Parcel Service (UPS), Inc., had the following stockholders

United Parcel Service (UPS), Inc., had the following stockholders equity amounts on December 31, 2010 (adapted, in millions): During 2010, UPS paid a cash dividend of $0.715 per share. Assume that, a...

Q: This case is based on the consolidated financial statements of Foot Locker

This case is based on the consolidated financial statements of Foot Locker, Inc., given in Appendix B at the end of this book. In particular, this case uses Foot Locker, Inc.s consolidated statement o...

Q: The stockholders equity for Heavenly Desserts Drive-Ins (HD)

The stockholders equity for Heavenly Desserts Drive-Ins (HD) on December 31, 2010, follows: On May 11, 2011, the market price of HD common stock was $19 per share. Assume HD distributed a 15% stock d...

Q: The balance sheet of Luxury Rug Company reported the following:

The balance sheet of Luxury Rug Company reported the following: Requirements 1. Compute the book value per share for the common stock, assuming all preferred dividends are fully paid up (none in arr...

Q: The stockholders equity for Icy Pop Drive-Ins (IP)

The stockholders equity for Icy Pop Drive-Ins (IP) on December 31, 2010, follows: On August 15, 2011, the market price of IP common stock was $15 per share. Assume IP distributed a 20% stock dividend...

Q: The balance sheet of Eclectic Rug Company reported the following:

The balance sheet of Eclectic Rug Company reported the following: Requirements 1. Compute the book value per share for the common stock, assuming all preferred dividends are fully paid up (none in a...

Q: London Jewelry Company reported the following summarized balance sheet at December 31

London Jewelry Company reported the following summarized balance sheet at December 31, 2010: During 2011, London completed these transactions that affected stockholder’s equity: Re...

Q: Good Foods, Inc., is authorized to issue 5,500

Good Foods, Inc., is authorized to issue 5,500,000 shares of $5.00 par common stock. In its initial public offering during 2010, Good issued 475,000 shares of its $5.00 par common stock for $7.00 per...

Q: Moscow Jewelry Company reported the following summarized balance sheet at December 31

Moscow Jewelry Company reported the following summarized balance sheet at December 31, 2010: During 2011, Moscow completed these transactions that affected stockholders equity: Requirements 1. Jour...

Q: Hearty Foods, Inc., is authorized to issue 5,000

Hearty Foods, Inc., is authorized to issue 5,000,000 shares of $2.00 par common stock. In its initial public offering during 2010, Hearty issued 500,000 shares of its $2.00 par common stock for $5.00...

Q: Evaluate the common stock of Regal Distributing Company as an investment.

Evaluate the common stock of Regal Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased in attractiveness...

Q: Evaluate the common stock of Basic Distributing Company as an investment.

Evaluate the common stock of Basic Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased in attractiveness...

Q: Comparative financial statement data of Bloomfield Optical Mart follow: /

Comparative financial statement data of Bloomfield Optical Mart follow: Other information: 1. Market price of Bloomfield common stock: $82.20 at December 31, 2010, and $52.96 at December 31, 2009....

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to DVR.com and Express Shops and have assembled the following data. Selected income statement data for...

Q: Comparative financial statement data of Rourke Optical Mart follow: /

Comparative financial statement data of Rourke Optical Mart follow: Other information: 1. Market price of Rourke common stock: $78.12 at December 31, 2010, and $59.10 at December 31, 2009. 2. Commo...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to CDROM.com and E-shop Stores and have assembled the following data. Selected income statement data for...

Q: (a) What is the “specific” sense of corporate

(a) What is the “specific” sense of corporate governance? (b) Why might some managers try to artificially raise or “puff up” the market price of their stocks? Describe several ways they could do this....

Q: Wells Company is a pesticide manufacturer. Its sales declined greatly this

Wells Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Wells’ chemical pesticides. During the coming year, W...

Q: Effective December 31, 2013, Zintel Corporation proposes to issue

Effective December 31, 2013, Zintel Corporation proposes to issue additional shares of its common stock in exchange for all the assets and liabilities of Smith Corporation and Platz Corporation, after...

Q: On January 1, 2014, Polo Company purchased 100% of

On January 1, 2014, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polo’s) $10 par value common stock with a market price of $17.50...

Q: Papke Company acquired 85% of the common stock of Serbin Company

Papke Company acquired 85% of the common stock of Serbin Company in two separate cash transactions. The first purchase of 72,000 shares (60%) on January 1, 2013, cost $490,000. The second purchase, on...

Q: Use the data provided in Exercise 8-2.

Use the data provided in Exercise 8-2. Required: A. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2014. B. Determine the amount of noncon...

Q: Use the data presented in Exercise 8-2, but assume

Use the data presented in Exercise 8-2, but assume use of the complete or the partial equity method rather than the cost method. Required: A. Prepare the journal entries Papke Company will make on...

Q: Douglas C. Mather, founder, chair, and chief executive

Douglas C. Mather, founder, chair, and chief executive of Fly-by-Night International Group (FBN), lived the fast-paced, risk-seeking life that he tried to inject into his company. Flying the company&a...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Walmart Stores, Inc. (Walmart), for Years þ1 through þ5. The data in Chapter 12 include the actual amounts for 2015 and the projected am...

Q: In Integrative Case 10.1, we projected financial statements for

In Integrative Case 10.1, we projected financial statements for Walmart Stores for Years +1 through +5. The data in Chapter 12 include the actual amounts for 2015 and the projected amounts for Year þ1...

Q: Delta Air Lines, Inc., is one of the largest airlines

Delta Air Lines, Inc., is one of the largest airlines in the United States. It has operated on the verge of bankruptcy for several years. Exhibit 5.17 presents selected financial data for Delta Air Li...

Q: Sun Microsystems, Inc., develops, manufactures, and sells computers

Sun Microsystems, Inc., develops, manufactures, and sells computers for network systems. Exhibit 5.20 presents selected financial data for Sun Microsystems for each of the five years ending June 30, Y...

Q: Exhibit 5.21 presents selected financial data for Best Buy Co

Exhibit 5.21 presents selected financial data for Best Buy Co., Inc., and Circuit City Stores, Inc., for fiscal 2008 and 2007. Best Buy and Circuit City operate as specialty retailers offering a wide...

Q: Exhibit 5.22 presents selected financial data for ABC Auto and

Exhibit 5.22 presents selected financial data for ABC Auto and XYZ Comics for fiscal Year 5 and Year 6. ABC Auto manufactures automobile components that it sells to automobile manufacturers. Competiti...

Q: Exhibit 5.23 presents selected financial data for The Tribune Company

Exhibit 5.23 presents selected financial data for The Tribune Company and The Washington Post Company for fiscal 2006 and 2007. The Washington Post Company is an education and media company. It owns,...

Q: The Coca-Cola Company is a global soft drink beverage company

The Coca-Cola Company is a global soft drink beverage company (ticker: KO) that is a primary and direct competitor with Starbucks. The data in Chapter 12’s Exhibits 12.14, 12.15, and...

Q: The Coca-Cola Company is a global soft-drink beverage

The Coca-Cola Company is a global soft-drink beverage company that is a direct competitor with Starbucks. The data in Chapter 12 include the actual amounts for 2015 and projected amounts for Year þ1 t...

Q: Exhibit 5.26 presents risk ratios for Walmart for 2014 and

Exhibit 5.26 presents risk ratios for Walmart for 2014 and 2013. Exhibits 1.19, 1.20, and 1.21 in Chapter 1 present the financial statements for Walmart. REQUIRED: a. Compute the values of each of th...

Q: Nelson Industries, a U.S.-based company, has

Nelson Industries, a U.S.-based company, has over the years issued 1 million shares of common stock to shareholders. Currently, in evaluating ownership, Nelson has entered in to a stock repurchase agr...

Q: Albright Inc. has recently issued a 10% stock dividend to

Albright Inc. has recently issued a 10% stock dividend to its existing stockholders. As a result of the issuance of the stock dividend the market price of the stock declined 25%. Albright has requeste...

Q: Arther Corporation acquired all of the outstanding $10 par voting common

Arther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc., on January 1, 2016, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 2015...

Q: On January 1, 2015, Silvio Corporation exchanged on a 1

On January 1, 2015, Silvio Corporation exchanged on a 1-for-3 basis common stock it held in its treasury for 80% of the outstanding stock of Jenko Company. Silvio Corporation common stock had a market...

Q: Healthy Life Co. is an HMO for businesses in the Fresno

Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life’s balance sheet: Common stock (3,000,000 shares authorized; 2,200,000 shares issued)...

Q: Amazon.com, Inc. (AMZN) is one of

Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal...

Q: The following table shows the stock price, earnings per share,

The following table shows the stock price, earnings per share, and dividends per share for Alphabet Inc. (GOOG), PepsiCo, Inc. (PEP), and Caterpillar Inc. (CAT) for a recent year: 1. For each compan...

Q: In teams, select a public company that interests you. Obtain

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 Exchang...

Q: The financial statements for Nike, Inc. (NKE), are

The financial statements for Nike, Inc. (NKE), are presented in Appendix E at the end of the text. The following additional information is available (in thousands): Accounts receivable at May 31, 201...

Q: Alpine Energy Corporation has 1,500,000 shares of $

Alpine Energy Corporation has 1,500,000 shares of $10 par common stock outstanding. On August 2, Alpine Energy declared a 5% stock dividend to be issued October 8 to stockholders of record on Septembe...

Q: Willey’s Grill & Restaurant Corporation wholesales ovens and ranges to restaurants throughout

Willey’s Grill & Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Willey’s Grill & Restaurant, which had 325,000 shares of common stock outstanding, declared...

Q: On November 23, Elder Lift Corporation, a wholesaler of hydraulic

On November 23, Elder Lift Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 14,200 shares of $25 par common stock with a current market price of $34. Journalize the entry to...

Q: On August 15, 2017, Cubs Corp. purchases 5,

On August 15, 2017, Cubs Corp. purchases 5,000 shares of common stock in Sox Inc. at a market price of $15 per share. In addition, Cubs pays brokerage fees of $1,000. On October 20, 2017, Cubs sells t...

Q: Sonic Solutions develops digital media products, services, and technologies for

Sonic Solutions develops digital media products, services, and technologies for consumers and content development professionals. In June 2010, a team of analysts at J.P. Morgan issued a research repor...

Q: Suppose the mutual fund in Problem 1 has a current market price

Suppose the mutual fund in Problem 1 has a current market price quotation of $21.89. Is this a load fund? If so, calculate the front-end load. Data from Problem 1: The World Income Appreciation Fund...

Q: The debt and equity section of the Robson Corporation balance sheet is

The debt and equity section of the Robson Corporation balance sheet is shown here. The current market price of the common shares is $20. Reconstruct the financial statement assuming that (a) a 15 per...

Q: You own a 20-year, $1,000 par

You own a 20-year, $1,000 par value bond paying 7 percent interest annually. The market price of the bond is $875, and your required rate of return is 10 percent. a. Compute the bond’s expected rate o...

Q: National Steel’s 15-year, $1,000 par value

National Steel’s 15-year, $1,000 par value bonds pay 5.5 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 7 percent. a. Compute the bond’s expect...

Q: The common stock of NCP paid $1.32 in dividends

The common stock of NCP paid $1.32 in dividends last year. Dividends are expected to grow at an 8 percent annual rate for an indefinite number of years. a. If NCP’s current market price is $23.50 per...

Q: Ziercher executives anticipate a growth rate of 12 percent for the company’s

Ziercher executives anticipate a growth rate of 12 percent for the company’s common stock. The stock is currently selling for $42.65 per share and pays an end-of-year dividend of $1.45. What is your e...

Q: Compute the costs for the following sources of financing: a

Compute the costs for the following sources of financing: a. A $1,000 par value bond with a market price of $970 and a coupon interest rate of 10 percent. Flotation costs for a new issue would be appr...

Q: Compute the cost of the following: a. A bond

Compute the cost of the following: a. A bond that has $1,000 par value (face value) and a contract or coupon interest rate of 9 percent. A new issue would have a flotation cost of 5 percent of the $1,...

Q: This Mini Case is available in My Finance Lab. After

This Mini Case is available in My Finance Lab. After graduating from college in December 2014, Elizabeth Arce started her career at the W&T Corporation, a small- to medium-sized warehouse distribu...

Q: Sanford’s common stock is expected to pay $1.85 in

Sanford’s common stock is expected to pay $1.85 in dividends next year, and the market price is projected to be $42.50 per share by yearend. If investors require a rate of return of 11 percent, what i...

Q: You own 150 shares of Budd Corporation’s preferred stock at a market

You own 150 shares of Budd Corporation’s preferred stock at a market price of $22 per share. Budd pays dividends of $1.55. What is your expected rate of return? If you have a required rate of return o...

Q: You are considering the purchase of Kline, Inc.‘s stock

You are considering the purchase of Kline, Inc.‘s stock at a market price of $36.72 per share. Assume the stock pays an annual dividend of $2.33. What would be your expected return? Should you purchas...

Q: The market price for the Earnest Corporation’s common stock is $43

The market price for the Earnest Corporation’s common stock is $43 per share. The price at the end of 1 year is expected to be $48, and dividends for next year should be $2.84. What is the expected ra...

Q: In the spring of 2015, the Brille Corporation was involved in

In the spring of 2015, the Brille Corporation was involved in issuing new common stock at a market price of $35. Dividends last year were $1.50 and are expected to grow at an annual rate of 5 percent...

Q: Nealon Energy Corporation engages in the acquisition, exploration, development,

Nealon Energy Corporation engages in the acquisition, exploration, development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 ye...

Q: Assume the market price of a 5-year bond for Margaret

Assume the market price of a 5-year bond for Margaret, Inc. is $900, and it has a par value of $1,000. The bond has an annual interest rate of 6 percent that is paid semiannually. What is the yield to...

Q: An 8-year bond for Rusk Corporation has a market price

An 8-year bond for Rusk Corporation has a market price of $700 and a par value of $1,000. If the bond has an annual interest rate of 6 percent, but pays interest semiannually, what is the bond’s yield...

Q: You own a 10-year bond that pays 6 percent interest

You own a 10-year bond that pays 6 percent interest annually. The par value of the bond is $1,000, and the market price of the bond is $900. What is the yield to maturity of the bond?

Q: The market price is $900 for a 10-year bond

The market price is $900 for a 10-year bond ($1,000 par value) that pays 6 percent interest (6 percent semiannually). What is the bond’s expected rate of return?

Q: Steven Long, a bond analyst, is analyzing a convertible bond

Steven Long, a bond analyst, is analyzing a convertible bond. The characteristics of the bond are given below. Convertible Bond Characteristics Par value…………………………………………………….$1,000 Annual coupon rate...

Q: Calculate the following: a. The current market conversion price

Calculate the following: a. The current market conversion price for the Sands convertible bond. b. The expected one-year rate of return for the Sands convertible bond. c. The expected one-year rate of...

Q: Refer to the ExxonMobil information in Case 14-3.

Refer to the ExxonMobil information in Case 14-3. Explain how pension expense and OCI would change if ExxonMobil were using IAS 19. Case 14-3: At December 31, 2015, ExxonMobil had 4,156 million share...

Q: Clovis Company recently issued $500,000 (face value)

Clovis Company recently issued $500,000 (face value) bonds to finance a new construction project. The company’s chief accountant prepared the following bond amortization schedule:...

Q: Silverado Inc. buys titanium from a supplier that requires a six

Silverado Inc. buys titanium from a supplier that requires a six-month firm commitment on all purchases. On January 1, 2017, Silverado signs a contract with the supplier to purchase 10,000 pounds of t...

Q: On July 1, 2017, Stan Getz, Inc., bought

On July 1, 2017, Stan Getz, Inc., bought call option contracts for 500 shares of Selmer Manufacturing common stock. The contracts cost $200, expire on September 15, and have an exercise price of $40 p...

Q: The cereal division of Kellogg Company intends to test market next year

The cereal division of Kellogg Company intends to test market next year an organic corn based cereal to be called NutriFlakesTR. The business plan calls for production to begin in late May 2015, with...

Q: By July 1, 2018, the market yield on the Akers

By July 1, 2018, the market yield on the Akers Company bonds described in E11–1 had risen to 10%. Required: What was the bonds’ market price on July 1, 2018?

Q: At December 31, 2015, ExxonMobil had 4,156 million

At December 31, 2015, ExxonMobil had 4,156 million shares of outstanding common stock. The closing market price of each share of stock at December 31, 2015, was $77.95. Presented below are excerpts fr...

Q: Starbucks Corp., the passionate purveyors of coffee and everything else that

Starbucks Corp., the passionate purveyors of coffee and everything else that goes with a full and rewarding coffeehouse experience, included the following table in its 2009 annual report: Total stock...

Q: Papa John’s International, Inc., operates and franchises pizza delivery and

Papa John’s International, Inc., operates and franchises pizza delivery and carryout restaurants in domestic and global markets. In its December 30, 2012, 10-K filing with the SEC, Papa John’s disclos...

Q: Trask Corporation, a public company whose shares are traded in the

Trask Corporation, a public company whose shares are traded in the over-the-counter market, had the following shareholders’ equity account balances at December 31, 2016: Common stock …………………..…………………....

Q: In its December 31, 2016, balance sheet, Castle,

In its December 31, 2016, balance sheet, Castle, Inc., reported 400,000 issued shares of common stock and 50,000 shares of treasury stock. The 2016 annual report also reported 100,000 exercisable ince...

Q: Riggs Corporation has the following balance sheet information at December 31,

Riggs Corporation has the following balance sheet information at December 31, 2016. Current liabilities …………………...…………………...…………………...$ 800,000 Convertible bonds ($1,000 par, 5%) …………………...………………….....

Q: On January 1, 2017, Darth Corp. granted nonqualified stock

On January 1, 2017, Darth Corp. granted nonqualified stock options to certain key employees as additional compensation. The options were for 100,000 shares of Darth’s $1 par value common stock at an e...

Q: Kadri Corporation reported basic EPS of $3.00 and diluted

Kadri Corporation reported basic EPS of $3.00 and diluted EPS of $2.40 for 2017. Its EPS calculations follow: Required: Kadri issued the convertible preferred stock at the beginning of 2017 and the...

Q: The stockholders’ equity section of Warm Ways Inc.’s balance sheet

The stockholders’ equity section of Warm Ways Inc.’s balance sheet at January 1, 2017, shows: Preferred stock, $100 par value, 10% dividend, 50,000 shares issued and outstanding ………………….. $ 5,000,0...

Q: It’s July 1, 2018, and the market price of Warm

It’s July 1, 2018, and the market price of Warm Ways’ common stock is $175 per share. There are 1.1 million common shares outstanding, and the Retained earnings account shows a balance of $45,000,000....

Q: The Shareholders’ Equity section of Holiday Roads Company’s balance sheet shows:

The Shareholders’ Equity section of Holiday Roads Company’s balance sheet shows: Net income for 2017 was $1,700,000, preferred stock dividends were $200,000, and...

Q: The market price of risk for copper is 0.5,

The market price of risk for copper is 0.5, the volatility of copper prices is 20% per annum, the spot price is 80 cents per pound, and the 6-month futures price is 75 cents per pound. What is the exp...

Q: Show that if y is a commodity’s convenience yield and u is

Show that if y is a commodity’s convenience yield and u is its storage cost, the commodity’s growth rate in the traditional risk-neutral world is r − y + u, where r is the risk-free rate. Deduce the r...

Q: A driver entering into a car lease agreement can obtain the right

A driver entering into a car lease agreement can obtain the right to buy the car in 4 years for $10,000. The current value of the car is $30,000. The value of the car, S, is expected to follow the pro...

Q: Suppose that in an asset swap B is the market price of

Suppose that in an asset swap B is the market price of the bond per dollar of principal,
is the default-free value of the bond per dollar of principal, and V is the present value of the asset swap s...

Q: A security’s price is positively dependent on two variables: the

A security’s price is positively dependent on two variables: the price of copper and the yen/dollar exchange rate. Suppose that the market price of risk for these variables is 0.5 and 0.1, respective...

Q: The variable S is an investment asset providing income at rate

The variable S is an investment asset providing income at rate q measured in currency A. It follows the process
in the real world. Defining new variables as necessary, give the process followed by...

Q: Suppose that the market price of risk for gold is zero.

Suppose that the market price of risk for gold is zero. If the storage costs are 1% per annum and the risk-free rate of interest is 6% per annum, what is the expected growth rate in the price of gold?...

Q: Suppose that in the risk-neutral Vasicek process a=0

Suppose that in the risk-neutral Vasicek process a=0:15, b=0:025, and =0.012. The market price of interest rate risk is -0:2. What are the risk-neutral and real-world processes for (a) the short rat...

Q: Suppose that the market price of risk of the short rate is

Suppose that the market price of risk of the short rate is
. Show that if the real-world process for the short rate is the one assumed by CIR, the risk-neutral process has the same functional form. D...

Q: How is the market price of risk defined for a variable that

How is the market price of risk defined for a variable that is not the price of an investment asset?

Q: Suppose that an interest rate x follows the process
where a

Suppose that an interest rate x follows the process
where a, x0, and c are positive constants. Suppose further that the market price of risk for x is
. What is the process for x in the traditional r...

Q: The correlation between a company’s gross revenue and the market index is

The correlation between a company’s gross revenue and the market index is 0.2. The excess return of the market over the risk-free rate is 6% and the volatility of the market index is 18%. What is the...

Q: What is the result corresponding to that given in Problem 31.

What is the result corresponding to that given in Problem 31.7. for the CIR model. Use maximum likelhood methods to estimate the a, b, and  parameters for the CIR model using the sam...

Q: A trader wishes to compute the price of a 1-year

A trader wishes to compute the price of a 1-year American call option on a 5-year bond with a face value of 100. The bond pays a coupon of 6% semiannually and the (quoted) strike price of the option i...

Q: An oil company is set up solely for the purpose of exploring

An oil company is set up solely for the purpose of exploring for oil in a certain small area of Texas. Its value depends primarily on two stochastic variables: the price of oil and the quantity of pro...

Q: ‘‘The expected future value of an interest rate in a risk

‘‘The expected future value of an interest rate in a risk-neutral world is greater than it is in the real world.’’ What does this statement imply about the market price of risk for (a) an interest ra...

Q: The variable S is an investment asset providing income at rate q

The variable S is an investment asset providing income at rate q measured in currency A. It follows the process
in the real world. Defining new variables as necessary, give the process followed by S,...

Q: Suppose the short rate r is 4% and its real-

Suppose the short rate r is 4% and its real-world process is
,while the risk-neutral process is
(a) What is the market price of interest rate risk? (b) What is the expected return and volatility fo...

Q: Suppose that in a risk-neutral world the CIR parameters are

Suppose that in a risk-neutral world the CIR parameters are a =0:1, b =0:03, and=0.07. The market price of interest rate risk is –1 times the square root of the short rate. What are the risk-neutral...

Q: Suppose that the market price of risk of the short rate is

Suppose that the market price of risk of the short rate is 1+2r (with 1 and 1 negative). Show that if the real-world process for the short rate is the one assumed by Vasicek, the risk-neutral proc...

Q: Rob Lowe would like to invest $100,000 in Franklin

Rob Lowe would like to invest $100,000 in Franklin Inc., which is offering common stock, preferred stock, and bonds on the open market. The common stock has paid $1 per share in dividends for the past...

Q: Travanti Company has a history of paying cash dividends on its common

Travanti Company has a history of paying cash dividends on its common stock. Although the firm has been profitable this year, the board of directors is planning construction of a second manufacturing...

Q: On January 1, 2017, Svenberg Inc.’s Stockholders’ Equity

On January 1, 2017, Svenberg Inc.’s Stockholders’ Equity category appeared as follows: Preferred stock, $80 par value, 8%, 1,000 shares issued and outstanding …… $ 80,000 Common stock, $10 par value,...

Q: Ellen Hays received a windfall from one of her investments. She

Ellen Hays received a windfall from one of her investments. She would like to invest $100,000 of the money in Linwood Inc., which is offering common stock, preferred stock, and bonds on the open marke...

Q: Favre Company has a history of paying cash dividends on its common

Favre Company has a history of paying cash dividends on its common stock. However, the firm did not have a particularly profitable year in 2017. At the end of the year, Favre found itself without the...

Q: On January 1, 2017, Frederiksen Inc.’s Stockholders’ Equity

On January 1, 2017, Frederiksen Inc.’s Stockholders’ Equity category appeared as follows: Preferred stock, $80 par value, 7%, 3,000 shares issued and outstanding ……..…. $ 240,000 Common stock, $10 pa...

Q: The Stockholders’ Equity section of the balance sheet for Cooperstown Corp.

The Stockholders’ Equity section of the balance sheet for Cooperstown Corp. at the end of 2017 appears as follows: 8%, $100 par, cumulative preferred stock, 200,000 shares authorized, 50,000 shares i...

Q: Refer to the information for Kepler Company on the previous page.

Refer to the information for Kepler Company on the previous page. Also, assume that for last year and for the current year, the market price per share of common stock is $2.98. In addition, for last y...

Q: Teslum Inc. has a number of divisions, including the Machina

Teslum Inc. has a number of divisions, including the Machina Division, a producer of high-end espresso makers, and the Java Division, a chain of coffee shops. Machina Division produces the EXP-100 mod...

Q: What is the relation between the expected rate of return and the

What is the relation between the expected rate of return and the required rate of return as they pertain to the fair market price and the current market price of a security?

Q: Johnson Motors’s bonds have 10 years remaining to maturity. Interest is

Johnson Motors’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon rate is 8 percent. The bonds have a yield to maturity of 9 perc...

Q: What is the quoted yield of a $10,000 face

What is the quoted yield of a $10,000 face value T-bill with a market price of $8,885 if there are 10, 25, 50, 100, and 250 days to maturity?

Q: A bank has issued a six-month, $2 million

A bank has issued a six-month, $2 million negotiable CD with a 0.52 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the ne...

Q: For each of the following situations, identify whether a bond would

For each of the following situations, identify whether a bond would be considered a premium bond, a discount bond, or a par bond. (LG 3-2) a. A bond’s current market price is greater than its face val...

Q: A bank has issued a six-month, $5 million

A bank has issued a six-month, $5 million negotiable CD with a 0.35 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the ne...

Q: Executive stock options (ESOs) are used to provide incentives for

Executive stock options (ESOs) are used to provide incentives for executives to improve company performance. ESOs are usually granted “at-the-money,” meaning that the exercise price of the options is...

Q: At the beginning of this chapter you read about a 2015 earnings

At the beginning of this chapter you read about a 2015 earnings announcement from HP in which earnings per share were reported as $1.85 for the quarter. Let’s make a simple assumption and say that ear...

Q: Assume you are given the following abbreviated financial statement.

Assume you are given the following abbreviated financial statement. ($ in millions) Current assets …………………………………………………………………………………. $150.0 Fixed and other assets ……………………………………….…………………………… $200.0 To...

Q: Jack Arnold is a resident of Lubbock, Texas, where he

Jack Arnold is a resident of Lubbock, Texas, where he is a prosperous rancher and businessman. He has also built up a sizable portfolio of common stock, which, he believes, is due to the fact that he...

Q: Financial Learning Systems has 2.5 million shares of common stock

Financial Learning Systems has 2.5 million shares of common stock outstanding and 100,000 shares of preferred stock. (The preferred pays annual cash dividends of $5 a share, and the common pays annual...

Q: Assume you’ve generated the following information about the stock of Bufford’s Burger

Assume you’ve generated the following information about the stock of Bufford’s Burger Barns: The company’s latest dividends of $4 a share are expected to grow to $4.32 next year, to $4.67 the year aft...

Q: A certain convertible bond has a conversion ratio of 21 and a

A certain convertible bond has a conversion ratio of 21 and a conversion premium of 20%. The current market price of the underlying common stock is $40. What is the bond’s conversion equivalent?

Q: Find the conversion value of a convertible preferred stock that carries a

Find the conversion value of a convertible preferred stock that carries a conversion ratio of 1.8, given that the market price of the underlying common stock is $40 a share. Would there be any convers...

Q: Angelo Martino just purchased 500 shares of AT&E at $

Angelo Martino just purchased 500 shares of AT&E at $61.50, and he has decided to write covered calls against these stocks. Accordingly, he sells five AT&E calls at their current market price of $5.75...

Q: Look at the Facebook option quotes in Figure 14.1,

Look at the Facebook option quotes in Figure 14.1, and focus on the call and put options with a strike price of $80. Can you use put-call parity to infer what the market price of Facebook stock must h...

Q: Repeat the analysis of problem 14.7, but this time

Repeat the analysis of problem 14.7, but this time focus on the Facebook call and put options in Figure 14.1 that have a strike price of $87.50. If you use put-call parity to find the price of Faceboo...

Q: Doris Wise is a young career woman. She lives in Phoenix

Doris Wise is a young career woman. She lives in Phoenix, Arizona, where she owns and operates a highly successful modeling agency. Doris manages her modest but rapidly growing investment portfolio, m...

Q: What is a strike price? How does it differ from the

What is a strike price? How does it differ from the market price of the stock?

Q: Brett Daly is an active stock trader and an avid market technician

Brett Daly is an active stock trader and an avid market technician. He got into technical analysis about 10 years ago, and although he now uses the Internet for much of his analytical work, he still e...

Q: A six-month call option contract on 100 shares of Home

A six-month call option contract on 100 shares of Home Depot common stock with a strike price of $60 can be purchased for $600. Assuming that the market price of Home Depot stock rises to $75 per shar...

Q: Suppose that a call option with a strike price of $45

Suppose that a call option with a strike price of $45 expires in one year and has a current market price of $5.16. The market price of the underlying stock is $46.21, and the risk-free rate is 1%. Use...

Q: In the beginning of this chapter you read about Neil Dana,

In the beginning of this chapter you read about Neil Dana, who exercised his option to buy six million shares. In that transaction, Mr. Dana spent $3.6 million to acquire stock valued at $229 million....

Q: In Table 14.2, notice that among the options expiring

In Table 14.2, notice that among the options expiring in one month, the option with the highest time value is the one with a strike price of $70. Likewise, among the options expiring in three months,...

Q: A certain bond has a current yield of 6.5%

A certain bond has a current yield of 6.5% and a market price of $846.15. What is the bond’s coupon rate?

Q: You are evaluating an outstanding issue of $1,000 par

You are evaluating an outstanding issue of $1,000 par value bonds with an 8.75% coupon rate that mature in 25 years and make quarterly interest payments. If the current market price for the bonds is $...

Q: Three years ago you purchased a 10% coupon bond that pays

Three years ago you purchased a 10% coupon bond that pays semiannual coupon payments for $975. What would be your bond equivalent yield if you sold the bond for current market price of $1,050?

Q: The Well-Managed Closed-End Fund turned in the following

The Well-Managed Closed-End Fund turned in the following performance for the year 2016. a. Based on this information, what was the NAV-based HPR for the WMCEF in 2016? b. Find the percentage (%) premi...

Q: The income statement for J and T Seafood appears below.

The income statement for J and T Seafood appears below. Additional information: 1. The weighted average common shares outstanding in 2008 were 30,000 shares. 2. The market price of J and T Seafood s...

Q: An investor owns 10,000 shares of a particular stock.

An investor owns 10,000 shares of a particular stock. The current market price is $80. What is the “worst case” value of the portfolio in six months? For the purposes of this question, define the wors...

Q: Exhibit 16.13 presents the comparative balance sheets for Plainview Corporation

Exhibit 16.13 presents the comparative balance sheets for Plainview Corporation for 2013 and 2014. The following additional information relates to 2014 activities: (1) The Retained Earnings account ch...

Q: On September 30, 2014, Homing Corporation issued 500,000

On September 30, 2014, Homing Corporation issued 500,000 shares of $0.10 par value common stock. The market price of the shares on this date was $30 per share. What journal entry did Homing record to...

Q: Carter, Inc., issued 100,000 shares of $1

Carter, Inc., issued 100,000 shares of $1 par value common stock on December 1, 2013. On that date, the market price of the shares was $18 per share. What journal entry did Carter record to reflect th...

Q: Prepare journal entries for the following transactions of Watt Corporation. Watt

Prepare journal entries for the following transactions of Watt Corporation. Watt has 20,000 shares of $15 par value common stock outstanding on January 1, 2013. The balance in the Additional Paid-In C...

Q: Prepare journal entries under the cost method to record the following treasury

Prepare journal entries under the cost method to record the following treasury stock transactions of Danos Corporation. a. Purchases 10,000 shares of its own $10 par value common stock for $30 per sha...

Q: Morrissey Corporation grants 50,000 stock options to its managerial employees

Morrissey Corporation grants 50,000 stock options to its managerial employees on December 31, 2013, to purchase 50,000 shares of its $1 par value common stock for $60 per share. The market price of a...

Q: Watson Corporation grants 20,000 stock options to its managerial employees

Watson Corporation grants 20,000 stock options to its managerial employees on December 31, 2013, to purchase 20,000 shares of its $10 par value common stock for $25 per share. The market price of a sh...

Q: Higgins Corporation issues $1 million of 20-year, $

Higgins Corporation issues $1 million of 20-year, $1,000 face value, 10% semiannual coupon bonds at par on January 2, 2013. Each $1,000 bond is convertible into 40 shares of $1 par value common stock....

Q: Kiersten Corporation sells 60,000 common stock warrants for $4

Kiersten Corporation sells 60,000 common stock warrants for $4 each on February 26, 2013. Each warrant permits its holder to purchase a share of the firm’s $10 par value common stock for $30 per share...

Q: Exhibit 16.11 presents a comparative statement of financial position for

Exhibit 16.11 presents a comparative statement of financial position for Biddle Corporation as of December 31, 2013 and 2014. Exhibit 16.12 presents an income statement for 2014. Additional informatio...

Q: The Layton Ball Corporation has a relatively complicated capital structure—that

The Layton Ball Corporation has a relatively complicated capital structure—that is, it raises funds using various financing devices. In addition to common shares, it has issued stock...

Q: Lowen Corporation grants stock options to its managerial employees on December 31

Lowen Corporation grants stock options to its managerial employees on December 31 of each year. Employees may acquire one share of common stock with each stock option. Lowen sets the exercise price eq...

Q: Pramble Company grants stock options to its managerial employees on December 31

Pramble Company grants stock options to its managerial employees on December 31 of each year. Employees may acquire one share of common stock with each stock option. Pramble sets the exercise price eq...

Q: Intelliant granted stock options to employees on January 1, 2013,

Intelliant granted stock options to employees on January 1, 2013, permitting them to purchase 24.6 million shares of Intelliant common stock for $22.63 per share. An option-pricing model indicates tha...

Q: Firms that do not elect the fair value option classify marketable securities

Firms that do not elect the fair value option classify marketable securities along two dimensions: ■ Purpose of investment: held-to-maturity debt securities, trading securities, or available for-sale...

Q: During 2013, Fischer/Black Company purchased equity securities classified as

During 2013, Fischer/Black Company purchased equity securities classified as available-for-sale securities. On May 22, 2014, the company recorded the following correct journal entry to record the sale...

Q: On December 12, 2013, Canning purchased 2,000 shares

On December 12, 2013, Canning purchased 2,000 shares of Werther. By December 31, the market price of these shares had dropped by $1,000. On March 2, 2014, Canning sold the 2,000 shares for $18,000 and...

Q: Amazon Beverages produces and bottles a line of soft drinks

Amazon Beverages produces and bottles a line of soft drinks using exotic fruits from Latin America and Asia. The manufacturing process entails mixing and adding juices and coloring ingredients at the...

Q: Bacon, Inc., has the following owners’ equity section in its

Bacon, Inc., has the following owners’ equity section in its May 31, 2010, comparative balance sheets:Required:a. Calculate the amount that should be shown on the balance sheet for c...

Q: Listed here are data for five companies. These data are for

Listed here are data for five companies. These data are for the companies’ 2016 fiscal years. The market price per share is the closing price of the companies’ stoc...

Q: The market value of Granger Corporation’s common stock had become excessively high

The market value of Granger Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Granger declared...

Q: Davis, Inc. and Royal, Inc. reported net incomes

Davis, Inc. and Royal, Inc. reported net incomes of $81,000 and $93,000, respectively, for their most recent fiscal years. Both companies had 10,000 shares of common stock issued and outstanding. The...

Q: The stockholders’ equity section of the balance sheet for Mann Equipment Co

The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, Year 1, is as follows: Note: The market value per share of the common stock is $42, and...

Q: Brice Co. completed the following transactions in Year 1, the

Brice Co. completed the following transactions in Year 1, the first year of operation 1. Issued 40,000 shares of no par common stock for $10 per share. 2. Issued 8,000 shares of $20 par, 6 percent, pr...

Q: The stockholders’ equity section of the balance sheet for Stinson Company at

The stockholders’ equity section of the balance sheet for Stinson Company at December 31, Year 1, is as follows: Note: The market value per share of the common stock is $40, and th...

Q: An investor is trying to decide whether to purchase stock in Henderson

An investor is trying to decide whether to purchase stock in Henderson Inc. or Glover Corporation. Glover Corporation reported annual earnings per share of $8, and the current market price of Glover s...

Q: Match each of the following ratios with its formula:

Match each of the following ratios with its formula:

Q: Lake Inc. and River, Inc. reported net incomes of

Lake Inc. and River, Inc. reported net incomes of $800,000 and $1,000,000, respectively, for the most recent fiscal year. Both companies had 200,000 shares of common stock issued and outstanding. The...

Q: Listed here are the stockholders’ equity sections of three public companies for

Listed here are the stockholders’ equity sections of three public companies for years ending in 2015 and 2016: Required: a. Divide the class in three sections and divide each secti...

Q: The Klein Company operates a simple chemical process to convert a single

The Klein Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a s...

Q: Braddock Inc. had the following long-term receivable account balances

Braddock Inc. had the following long-term receivable account balances at December 31, 2016. Note receivable from sale of division…………$1,500,000 Note receivable from officer…………………………. 400,000 Trans...

Q: Bunge, a grain dealer, contracted with Recker, a farmer

Bunge, a grain dealer, contracted with Recker, a farmer, to purchase 10,000 bushels of soybeans at $3.35 per bushel. The contract did not specify where the beans were to have been grown, except that t...

Q: Arslantian, a suburban homeowner who was involved in a major landscaping

Arslantian, a suburban homeowner who was involved in a major landscaping project, offered to pay Manley, a county employee, 50 percent of the market price for certain shrubbery belonging to the county...

Q: TECA Halifax makes kids’ bicycles. The frames division makes and paints

TECA Halifax makes kids’ bicycles. The frames division makes and paints the frames and supplies them to the assembly division where the bicycles are assembled. TECA is a successful and profitable corp...

Q: Quest Motors Inc. operates as a decentralized multidivision company. The

Quest Motors Inc. operates as a decentralized multidivision company. The tivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost fo...

Q: The Handit Company manufactures telecommunications equipment at its plant in Ottawa,

The Handit Company manufactures telecommunications equipment at its plant in Ottawa, Ontario. The company has marketing divisions throughout the world. A Handit marketing division in Vienna, Austria,...

Q: Industrial Diamonds, Inc., based in Montreal, Quebec, has

Industrial Diamonds, Inc., based in Montreal, Quebec, has two divisions: â–  South African mining division, which mines a rich diamond vein in South Africa. â–  Canadia...

Q: Ajax Corporation has two divisions. The mining division makes toldine,

Ajax Corporation has two divisions. The mining division makes toldine, which is then transferred to the metals division. The toldine is further processed by the metals division and sold to customers a...

Q: Europa Inc., has two divisions, A and B, which

Europa Inc., has two divisions, A and B, which manufacture expensive bicycles. Division A produces the bicycle frame, and Division B assembles the rest of the bicycle onto the frame. There is a market...

Q: Refer to Exercise 21-28. Required:

Refer to Exercise 21-28. Required: 1. Suppose the manager of Division A has the option of (a) cutting the external price to $195, with the certainty that sales will rise to 1,000 units or (b) maintai...

Q: Italian Sausages Inc. is still a family-owned company located

Italian Sausages Inc. is still a family-owned company located in Maple, Ontario. It has experienced significant growth in the last 10 years, and nowadays it employs more than 100 persons in production...

Q: Crango Products is a cranberry cooperative that operates two divisions: a

Crango Products is a cranberry cooperative that operates two divisions: a harvesting division and a processing division. Currently, all of Harvesting’s output is converted into cranb...

Q: The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor

The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit centre. The semiconductor division...

Q: Shown below is the liabilities and stockholders’ equity section of the balance

Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,200,000. For...

Q: Dave Matthew Inc. issues 500 shares of $10 par value

Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000. Instructions a. Prepare the journal entry for the issua...

Q: At December 31, 2017, Indigo Girls Company has outstanding noncancelable

At December 31, 2017, Indigo Girls Company has outstanding noncancelable purchase commitments for 36,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The comp...

Q: Selected accounts included in the property, plant, and equipment section

Selected accounts included in the property, plant, and equipment section of Lobo Corporation’s balance sheet at December 31, 2016, had the following balances. Land…………………………...$ 300,000 Land improvem...

Q: Earnhart Corporation has outstanding 3,000,000 shares of common

Earnhart Corporation has outstanding 3,000,000 shares of common stock with a par value of $10 each. The balance in its Retained Earnings account at January 1, 2017, was $24,000,000, and it then had Pa...

Q: Mask Company has 30,000 shares of $10 par value

Mask Company has 30,000 shares of $10 par value common stock authorized and 20,000 shares issued and outstanding. On August 15, 2017, Mask purchased 1,000 shares of treasury stock for $18 per share. M...

Q: At December 31, 2017, Ashley Co. has outstanding purchase

At December 31, 2017, Ashley Co. has outstanding purchase commitments for 150,000 gallons, at $6.20 per gallon, of a raw material to be used in its manufacturing process. The company prices its raw ma...

Q: On January 1, 2017, Agassi Corporation had the following stockholders’

On January 1, 2017, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding)……$600,000 Paid-in Capital in Excess of Par—C...

Q: The financial statements of P&G are presented in Appendix B

The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s...

Q: On November 1, 2017, Columbo Company adopted a stock-

On November 1, 2017, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the company’s $10 par value common stock. The options were granted...

Q: On January 1, 2018, Titania Inc. granted stock options

On January 1, 2018, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisa...

Q: On January 1, 2016, Nichols Corporation granted 10,000

On January 1, 2016, Nichols Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Nichols’ $5 par value common stock at a price of $20 per sha...

Q: Venzuela Company’s net income for 2017 is $50,000.

Venzuela Company’s net income for 2017 is $50,000. The only potentially dilutive securities outstanding were 1,000 options issued during 2016, each exercisable for one share at $6. None has been exerc...

Q: On August 15, 2016, Outkast Co. invested idle cash

On August 15, 2016, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price...

Q: Aranda Corporation made the following cash purchases of securities during 2017,

Aranda Corporation made the following cash purchases of securities during 2017, which is the first year in which Arantxa invested in securities. 1. On January 15, purchased 10,000 shares of Sanchez C...

Q: The following are two independent situations. Situation 1: Conchita

The following are two independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2017...

Q: On January 1, 2017, Gottlieb Corporation issued $4,

On January 1, 2017, Gottlieb Corporation issued $4,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be co...

Q: Assume that Sarazan Company has a share-option plan for top

Assume that Sarazan Company has a share-option plan for top management. Each share option represents the right to purchase a $1 par value ordinary share in the future at a price equal to the fair valu...

Q: Assume that Amazon.com has a stock-option plan for

Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the...

Q: The information below pertains to Barkley Company for 2018. Net

The information below pertains to Barkley Company for 2018. Net income for the year…………………………………$1,200,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares...

Q: Johnstone Co. purchased a put option on Ewing common shares on

Johnstone Co. purchased a put option on Ewing common shares on July 7, 2017, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on tha...

Q: Warren Co. purchased a put option on Echo common shares on

Warren Co. purchased a put option on Echo common shares on January 7, 2017, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purc...

Q: On October 15, 2017, Oil Products Co. purchased 4

On October 15, 2017, Oil Products Co. purchased 4,000 barrels of fuel oil with a cost of $240,000 ($60 per barrel). Oil Products is holding this inventory in anticipation of the winter 2018 heating se...

Q: Lexington Co. has the following securities outstanding on December 31,

Lexington Co. has the following securities outstanding on December 31, 2017 (its first year of operations). During 2018, Summerset Company stock was sold for $9,200, the difference between the $9,20...

Q: Bedard Corporation reported net income of $300,000 in 2017

Bedard Corporation reported net income of $300,000 in 2017 and had 200,000 shares of common stock outstanding throughout the year. Also outstanding all year were 45,000 options to purchase common stoc...

Q: Ferraro, Inc. established a stock-appreciation rights (SARs

Ferraro, Inc. established a stock-appreciation rights (SARs) program on January 1, 2017, which entitles executives to receive cash at the date of exercise for the difference between the market price o...

Q: Petrenko Corporation has outstanding 2,000 $1,000 bonds

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2017, when the unamortized discount is $...

Q: On January 2, 2017, Jones Company purchases a call option

On January 2, 2017, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share....

Q: On January 1, 2017, Barwood Corporation granted 5,000

On January 1, 2017, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time d...

Q: On December 31, 2013, Beckford Company issues 150,000

On December 31, 2013, Beckford Company issues 150,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-establ...

Q: Capulet Company establishes a stock-appreciation rights program that entitles its

Capulet Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established...

Q: Refer to the data for Barwood Corporation in BE16-6.

Refer to the data for Barwood Corporation in BE16-6. Repeat the requirements assuming that instead of options, Barwood granted 2,000 shares of restricted stock. From BE16-6: On January 1, 2017, Barwo...

Q: The following statement was prepared by Maloney Corporation’s accountant.

The following statement was prepared by Maloney Corporation’s accountant. The following additional information relating to Maloney Corporation is available for the year ended Septe...

Q: The transactions below took place during the year 2017. 1

The transactions below took place during the year 2017. 1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market pri...

Q: Ballard Co. reported $145,000 of net income for

Ballard Co. reported $145,000 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from operat...

Q: Ashley Company is a young and growing producer of electronic measuring instruments

Ashley Company is a young and growing producer of electronic measuring instruments and technical equipment. You have been retained by Ashley to advise it in the preparation of a statement of cash flow...

Q: Matheny Inc. went public 3 years ago. The board of

Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through t...

Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Assume that prior to the imposition of the import fee, the country annually consumed 900 million...

Q: (Instructor-provided spreadsheet recommended) Consider an individual’s utility function

(Instructor-provided spreadsheet recommended) Consider an individual’s utility function over two goods, qm and qs, where m indicates the primary market in which a policy will have its effect and s is...

Q: (Use of a instructor-provided spreadsheet recommended for parts a

(Use of a instructor-provided spreadsheet recommended for parts a through e, and necessary for part f) A town with a population of 164,250 persons who live in 39,050 households is considering introduc...

Q: A person’s demand for gizmos is given by the following equation:

A person’s demand for gizmos is given by the following equation: q = 6 – 0.5p + 0.0002I where, q is the quantity demanded at price p when the person’s income is I. Assume initially that the person’s i...

Q: 1. Cara Fabricating Co. and Taso Corp. agreed orally

1. Cara Fabricating Co. and Taso Corp. agreed orally that Taso would custom manufacture a compressor for Cara at a price of $120,000. After Taso completed the work at a cost of $90,000, Cara notified...

Q: Pawn Corporation purchased 30 percent of Shop Company’s common stock on January

Pawn Corporation purchased 30 percent of Shop Company’s common stock on January 1, 20X5, by issuing preferred stock with a par value of $50,000 and a market price of $120,000. The fo...

Q: Saspro Division is considered to be an individual reporting unit of Pabor

Saspro Division is considered to be an individual reporting unit of Pabor Company. Pabor acquired the division by issuing 100,000 shares of its common stock with a market price of $7.60 each. Pabor’s...

Q: Pizza Corporation purchased 100 percent of the common stock of Slice Corporation

Pizza Corporation purchased 100 percent of the common stock of Slice Corporation on January 1, 20X2, by issuing 45,000 shares of its $6 par value common stock. The market price of Pizza’s shares at th...

Q: Select the correct answer for each of the following questions.

Select the correct answer for each of the following questions. 1. On December 31, 20X3, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its...

Q: Pullman Corp issued 10-year bonds four years ago with a

Pullman Corp issued 10-year bonds four years ago with a coupon rate of 9.375 percent. At the time of issue, the bonds sold at par. Today bonds of similar risk and maturity must pay an annual coupon of...

Q: Showbiz, Inc., has issued eight-year bonds with a

Showbiz, Inc., has issued eight-year bonds with a coupon of 6.375 percent and semiannual coupon payments. The market’s required rate of return on such bonds is 7.65 percent. a. What is the market pri...

Q: Ruth Hornsby is looking to invest in a three-year bond

Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she e...

Q: Seven years ago Eastern Corporation issued 20-year bonds that had

Seven years ago Eastern Corporation issued 20-year bonds that had a $1000 face value, paid interest annually, and that had a coupon rate of 7 percent. If the market rate of interest is 5.5 percent tod...

Q: Explain why maximizing the current market price of a firm’s stock is

Explain why maximizing the current market price of a firm’s stock is an appropriate goal for the firm’s management?

Q: Given a change in market interest rates, which will change more

Given a change in market interest rates, which will change more; the market price of a bond with 20 years until maturity or the market price of a bond with 5 years until maturity? Assume all the chara...

Q: Match the items in the left-hand column with the descriptions

Match the items in the left-hand column with the descriptions/explanations in the right-hand column.

Q: Stake Company reported the following summarized balance sheet data as of December

Stake Company reported the following summarized balance sheet data as of December 31, 20X2: Stake issues 4,000 additional shares of its $10 par value stock to its shareholders as a stock dividend on...

Q: Following are seven independent cases on how accounting facts might be reported

Following are seven independent cases on how accounting facts might be reported on an individual company’s interim financial reports. 1. Bean Company was reasonably certain it would have an employee s...

Q: Select the correct answer for each of the following questions.

Select the correct answer for each of the following questions. 1. Which of the following is an inherent difficulty in determining the results of operations on an interim basis? a. Cost of sales refle...

Q: Select the correct answer for each of the following questions:

Select the correct answer for each of the following questions: 1. On December 31, 20X7, Judy is a fully vested participant in a company-sponsored pension plan. According to the plan’...

Q: Sound Manufacturing Corporation prepared the following balance sheet as of January 1

Sound Manufacturing Corporation prepared the following balance sheet as of January 1, 20X8: The company is considering a 2-for-1 stock split, a stock dividend of 4,000 shares, or a stock dividend of...

Q: Dandy Container Corporation engaged the accounting firm of Adams and Adams to

Dandy Container Corporation engaged the accounting firm of Adams and Adams to audit financial statements to be used in connection with an interstate public offering of securities. The audit was comple...

Q: Why can the market price of a stock differ from its true

Why can the market price of a stock differ from its true (intrinsic) value?

Q: Healthy Potions, Inc., a pharmaceutical company, bought a machine

Healthy Potions, Inc., a pharmaceutical company, bought a machine at a cost of $2 million five years ago that produces pain-reliever medicine. The machine has been depreciated over the past five years...

Q: The Imaginary Products Co. currently has debt with a market value

The Imaginary Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 year...

Q: Quarri Industries has eight percent coupon bonds outstanding. These bonds have

Quarri Industries has eight percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest semiannually, and will mature in 6 years. If the tax rate is 35 percent, what are...

Q: Use the information in questions 13.2 and 13.3

Use the information in questions 13.2 and 13.3 as well as the following information to compute the WACC for Quarri Industries. In addition to common stock, Quarri has 500,000 preferred shares outstand...

Q: Moriband Corp. paid a dividend of $2.15 yesterday

Moriband Corp. paid a dividend of $2.15 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for the foreseeable future. If investors in stocks of companies like Moriban...

Q: Courtesy Bancorp issued perpetual preferred stock a few years ago. The

Courtesy Bancorp issued perpetual preferred stock a few years ago. The bank pays an annual dividend of $4.27 and your required rate of return is 12.2 percent. a. What is the value of the stock given y...

Q: Rhea Kirby owns shares in Ryoko Corp. Currently, the market

Rhea Kirby owns shares in Ryoko Corp. Currently, the market price of the stock is $36.34. Management expects dividends to grow at a constant rate of 6 percent for the foreseeable future. Its last divi...

Q: Caterpillar, Inc. management is trying to decide between selling a

Caterpillar, Inc. management is trying to decide between selling a new bond issue in the U.S. or the Eurodollar bond market. In either market the bonds will be denominated in dollars and will have a t...

Q: You own a call option on Pepsico stock with a strike price

You own a call option on Pepsico stock with a strike price of $60 per share that expires in 60 days. The current market price of Pepsico stock is $63.50 per share. What are the limits on the value of...

Q: Assume that the current market price of Montrose Industrials stock is $

Assume that the current market price of Montrose Industrials stock is $28 per share and will either rise to $38 per share or fall to $21 per share in one month. The risk-free rate for one month is 1 p...

Q: Alvin Cagle was a potato farmer in Alabama who had had several

Alvin Cagle was a potato farmer in Alabama who had had several business dealings with the H. C. Schmieding Produce Co. (Schmieding). Several months before harvest, Cagle entered into an oral sales con...

Q: The board of directors of Wicklow plc is considering an expansion of

The board of directors of Wicklow plc is considering an expansion of production capacity following an increase in sales over the past two years. The most recent financial statements for the business a...

Q: Alpha plc, a dynamic, fast-growing business in microelectronics

Alpha plc, a dynamic, fast-growing business in microelectronics, has just made a bid of 17 of its own shares for every 20 shares of Beta plc, which manufactures a range of electric motors. Financial s...

Q: To establish the existence and rights of a long-term investment

To establish the existence and rights of a long-term investment in the common stock of a publicly traded company, an auditor ordinarily performs a security count or a. Relies on the entity’s internal...

Q: Medical Products, Inc. (MPI) was created in 2016

Medical Products, Inc. (MPI) was created in 2016 and entered the optical equipment industry. Its made-to-order optical equipment requires large investments in research and development. To fund these n...

Q: For each of the following items, assume that Josh Feldstein,

For each of the following items, assume that Josh Feldstein, CPA, is expressing an opinion on Scornick Company’s financial statements for the year ended December 31, 2018; that he completed fieldwork...

Q: In applying audit procedures and evaluating the results of those procedures,

In applying audit procedures and evaluating the results of those procedures, auditors may encounter specific information that may raise a question concerning the existence of noncompliance with laws a...

Q: Western Trading Company is a sole proprietorship engaged in the grain brokerage

Western Trading Company is a sole proprietorship engaged in the grain brokerage business. On December 31, 20X0, the entire grain inventory of the company was stored in outside bonded warehouses. The c...

Q: Ji Wu of Troy, New York, has $5,

Ji Wu of Troy, New York, has $5,000 that he wants to invest in the stock market. Ji is in college on a scholarship and does not plan to use the $5,000 or any dividend income for another five years, wh...

Q: Victor and Maria have decided to increase their contribution to their investment

Victor and Maria have decided to increase their contribution to their investment portfolio since Victor is now age 59 and thinking about retiring in five years. For years, they have followed a moderat...

Q: What is the market price of a $1,000,

What is the market price of a $1,000, 8 percent bond if comparable market interest rates drop to 6 percent and the bond matures in 15 years?

Q: What is the market price of a $1,000,

What is the market price of a $1,000, 8 percent bond if comparable market interest rates rise to 10 percent and the bond matures in 14 years?

Q: Xiao and Shiao Jing-jian, newlyweds from Laramie, Wyoming

Xiao and Shiao Jing-jian, newlyweds from Laramie, Wyoming, have decided to begin investing for the future. Xiao is a 7-Eleven store manager, and Shiao is a high-school math teacher. The couple intends...

Q: USA National Bank, the nationwide banking company, owns many types

USA National Bank, the nationwide banking company, owns many types of investments. Assume that USA National Bank paid $650,000 for trading securities on December 5. Two weeks later, USA National Bank...

Q: Refer to the USA National Bank data in Q5-37.

Refer to the USA National Bank data in Q5-37. At December 31, USA National Bank’s balance sheet should report a. investment in trading securities of $650,000. b. unrealized gain of $7,000. c. inves...

Q: Insurance companies and pension plans hold large quantities of bond investments.

Insurance companies and pension plans hold large quantities of bond investments. Bolton Insurance Corp. purchased $2,800,000 of 9% bonds of Souza, Inc., for 112 on January 1, 2016. These bonds pay int...

Q: Insurance companies and pension plans hold large quantities of bond investments.

Insurance companies and pension plans hold large quantities of bond investments. Variety Insurance Corp. purchased $3,900,000 of 4% bonds of Sherman, Inc., for 114 on January 1, 2016. These bonds pay...

Q: Mountainside Medical Goods is embarking on a massive expansion. Assume plans

Mountainside Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s exist...

Q: Summit Medical Goods is embarking on a massive expansion. Assume the

Summit Medical Goods is embarking on a massive expansion. Assume the plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existin...

Q: Riverton Corporation, the investment banking company, often has extra cash

Riverton Corporation, the investment banking company, often has extra cash to invest. Suppose Riverton buys 1,000 shares of Switzer, Inc., stock at $48 per share. Assume Riverton expects to hold the S...

Q: Northern Corporation, the investment banking company, often has extra cash

Northern Corporation, the investment banking company, often has extra cash to invest. Suppose Northern buys 1,000 shares of Twister, Inc., stock at $46 per share. Assume Northern expects to hold the T...

Q: Use the data from S8-9 for this exercise. At

Use the data from S8-9 for this exercise. At year-end on December 31, 2016, the American Express common stock that Williams Company holds has a quoted market price of $84.16 per share. Assuming that W...

Q: Use the data from S8-9 and S8-10 for

Use the data from S8-9 and S8-10 for this exercise. Williams Company sells its entire investment in American Express common stock on November 22, 2017, for a total of $74,500. Record the entries for t...

Q: Williams Company purchases 1,000 shares of American Express common stock

Williams Company purchases 1,000 shares of American Express common stock at the market price of $81.34 on March 23, 2016. (The equity method does not apply in this situation.) Williams intends to hold...

Q: Microsoft is a company that sells its products in many countries all

Microsoft is a company that sells its products in many countries all over the world. Use the data from Table 11.3.18 to explore how its market price movements relate to more general movements in the g...

Q: Closed-end funds sell shares in a fixed basket (portfolio

Closed-end funds sell shares in a fixed basket (portfolio) of securities (as distinguished from ordinary mutual funds, which continuously buy and sell shares of securities). Consider the net asset val...

Q: Business firms occasionally buy back their own stock for various reasons,

Business firms occasionally buy back their own stock for various reasons, sometimes when they view the market price as a bargain compared to their view of its true worth. It has been observed that the...

Q: Describe the conversion privilege on a convertible security. Explain how the

Describe the conversion privilege on a convertible security. Explain how the market price of the underlying common stock affects the market price of a convertible bond.

Q: Find the conversion value of a convertible bond that carries a conversion

Find the conversion value of a convertible bond that carries a conversion ratio of 24, given that the market price of the underlying common stock is $55 a share. Would there be any conversion premium...

Q: Selected financial information about Backpacking Resources, Inc., is as follows

Selected financial information about Backpacking Resources, Inc., is as follows: Total assets …………………………………………………….…..…..$20,000,000 Total liabilities …………………………………………………….……..$8,000,000 Total prefer...

Q: Beta Ltd had the following changes during 20X1: /

Beta Ltd had the following changes during 20X1: Required: Calculate the time-weighted average number of shares for the basic earnings per share denominator. Note that adjustments will be required fo...

Q: The following are the accounts of Bouncy plc, a company that

The following are the accounts of Bouncy plc, a company that manufactures playground equipment, for the year ended 30 November 20X6. The directors are considering two schemes to raise £...

Q: The following is an extract from the trial balance of Imecet at

The following is an extract from the trial balance of Imecet at 31 October 2005: Other relevant information: (i) One million $1 ordinary shares were issued 1 May 2005 at the market price of $1.75 pe...

Q: Prop and Flap have produced the following statements of financial position as

Prop and Flap have produced the following statements of financial position as at 31 October 2008: The following information is relevant to the preparation of the financial statements of the Prop Gro...

Q: Russell Company is a pesticide manufacturer. Its sales declined greatly this

Russell Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Russell’s chemical pesticides. In the coming year,...

Q: (Instructor-provided spreadsheet recommended) Consider an individual’s utility function

(Instructor-provided spreadsheet recommended) Consider an individual’s utility function over two goods, qm and qs, where m indicates the primary market in which a policy will have its effect and s is...

Q: A town with a population of 164,250 persons who live

A town with a population of 164,250 persons who live in 39,050 households is considering introducing a recycling program that would require residents to separate paper from their household waste so th...

Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Assume that prior to the imposition of the import fee, the country annually consumed 900 million...

Q: Evaluate the common stock of Bastille Distributing Company as an investment.

Evaluate the common stock of Bastille Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decreased...

Q: Turnover Specialists, Ltd. (TSL), specializes in taking underperforming

Turnover Specialists, Ltd. (TSL), specializes in taking underperforming companies to a higher level of performance. TSL’s capital structure at December 31, 2015, included 11,000 shares of $2.30 prefer...

Q: Walker Jewelry Company reported the following summarized balance sheet at December 31

Walker Jewelry Company reported the following summarized balance sheet at December 31, 2016: During 2017, Walker Jewelry completed these transactions that affected stockholders’ eq...

Q: Dublin Jewelry Company reported the following summarized balance sheet at December 31

Dublin Jewelry Company reported the following summarized balance sheet at December 31, 2016: During 2017, Dublin Jewelry completed these transactions that affected stockholders’ eq...

Q: Comparative financial statement data of Sanfield Optical Mart follow:

Comparative financial statement data of Sanfield Optical Mart follow: Other information: 1. Market price of Sanfield common stock: $89.38 at December 31, 2016, and $8...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to Star.com and Westlake Shops and have assembled the following data. Selected income statement data for...

Q: Comparative financial statement data of Arch Optical Mart follow:

Comparative financial statement data of Arch Optical Mart follow: Other information: 1. Market price of Arch common stock: $88.17 at December 31, 2016, and $77.01 at December 31, 20...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to Disc.com and Holiday Shops and have assembled the following data. Selected income statement data for...

Q: Better Ventures, Ltd. (BVL), specializes in taking underperforming

Better Ventures, Ltd. (BVL), specializes in taking underperforming companies to a higher level of performance. BVL’s capital structure at December 31, 2015, included 12,000 shares of $2.20 preferred s...

Q: United Parcel Service (UPS), Inc., had the following stockholders’

United Parcel Service (UPS), Inc., had the following stockholders’ equity amounts on December 31, 2016 (adapted, in millions): Common stock and additional paid-in capital; 1,135 shares issued............

Q: A company declares a 5% stock dividend. The debit to

A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal to a. the market value of the shares to be issued. b. the excess of the market price over the original issue...

Q: Which of the following statements is not true about a 3-

Which of the following statements is not true about a 3-for-1 stock split? a. Par value is reduced to one-third of what it was before the split. b. Retained Earnings remains the same. c. Total stoc...

Q: For fiscal year 2016, Orange Computer, Inc., reported net

For fiscal year 2016, Orange Computer, Inc., reported net sales of $19,320 million, net income of $1,991 million, and no significant discontinued operations or accounting changes. Earnings per share was...

Q: The stockholders’ equity for Rightwell Corporation on June 16, 2017,

The stockholders’ equity for Rightwell Corporation on June 16, 2017, follows: On June 16, 2017, the market price of Rightwell common stock was $18 per share. Assume Rightwell decla...

Q: On January 14, Roland Corporation issued 100,000 shares of

On January 14, Roland Corporation issued 100,000 shares of its $0.01 par-value common stock for the market price of $13.50 per share. Attorney Christie Mann invoiced Roland Corporation for $28,000 and...

Q: The balance sheet of Eclectic Rug Company reported the following:

The balance sheet of Eclectic Rug Company reported the following: Redeemable preferred stock, 8%, $100 par value, redemption value $25,000; outstanding 200 shares................ $ 20,000 Common stock...

Q: The stockholders’ equity for Little Wonders Company on August 13, 2017

The stockholders’ equity for Little Wonders Company on August 13, 2017, follows: On August 13, 2017, the market price of Little Wonders common stock was $20 per share. Assume Littl...

Q: The balance sheet of Walton Wallcoverings Company reported the following:

The balance sheet of Walton Wallcoverings Company reported the following: Redeemable preferred stock, 6%, $90 par value, redemption value $25,000; outstanding 200 shares................ $18,000 Common...

Q: Evaluate the common stock of Monroe Falls Distributing Company as an investment

Evaluate the common stock of Monroe Falls Distributing Company as an investment. Specifically, use the three common stock ratios to determine whether the common stock increased or decre...

Q: T.J. Enterprises is trying to determine the weights to

T.J. Enterprises is trying to determine the weights to be used in estimating their cost of capital. The firm’s current balance sheet and market information regarding the price and nu...

Q: New Ideas Inc. currently has 30,000 of its 9

New Ideas Inc. currently has 30,000 of its 9% semi-annual coupon bonds outstanding (Par value =1000). The bonds will mature in 15 years and are currently priced at $1,340 per bond. The firm also has a...

Q: The CFO of DMI is trying to determine the company’s WACC.

The CFO of DMI is trying to determine the company’s WACC. Brad, a promising MBA, says that the company should use book value to assign the components percentage for the WACC. Angela,...

Q: Clark Explorers Inc., an engineering firm has the following capital structure

Clark Explorers Inc., an engineering firm has the following capital structure: Using market value and book value (separately, of course), find the adjusted WACC for Clark Explorers at the following ta...

Q: Kenny Enterprises will issue the same debt in Problem 3 but now

Kenny Enterprises will issue the same debt in Problem 3 but now will use an investment banker that charges $25 per bond for their services. What is the new cost of debt for Kenny Enterprises at a mark...

Q: In 2011 (year 0), Mrs. Linsey exercised a stock

In 2011 (year 0), Mrs. Linsey exercised a stock option by paying $100 per share for 225 shares of ABC stock. The market price at date of exercise was $312 per share. In 2018, she sold the 225 shares f...

Q: Two years ago, Corporation WZ granted a stock option to an

Two years ago, Corporation WZ granted a stock option to an employee to purchase 2,500 shares of WZ stock for $30 per share. Since the date of grant, the market price of the stock has risen steadily an...

Q: Ernlo is an accrual basis corporation with a June 30 fiscal year

Ernlo is an accrual basis corporation with a June 30 fiscal year-end. On June 2, 2018, Ernlo entered into a binding contract to purchase a six-month supply of heating oil from a local distributor at t...

Q: Adams Corporation manufactures appliances. This year, the government increased the

Adams Corporation manufactures appliances. This year, the government increased the corporate tax rate by 5 percent. Adams responded by raising its prices. Customer demand remained steady; therefore, A...

Q: Six years ago, Corporation AT granted a stock option to an

Six years ago, Corporation AT granted a stock option to an employee to purchase 1,000 shares of AT stock for $15 per share. At date of grant, AT stock was selling for $14.10 per share. Over the last s...

Q: Record each of the following transactions in general journal format.

Record each of the following transactions in general journal format. a. Issued 50,000 shares of $1 par capital stock for $35 each. b. Billed customers for services provided, $10,000. c. Purchased supp...

Q: Smolira Golf Corp. has 20,000 shares of common stock outstanding,

Smolira Golf Corp. has 20,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2018 was $58. What is the price-earnings ratio? What are the dividends per sha...

Q: The following facts apply to a convertible bond making semiannual

The following facts apply to a convertible bond making semiannual payments:Conversion price …………………………………………………………………… $37/shareCoupon rate …………………………………………………………………………………. 2.6%Par value …………………………………...

Q: The following facts apply to a convertible bond making semiannual

The following facts apply to a convertible bond making semiannual payments:Conversion price …………………………………………………………………… $37/shareCoupon rate …………………………………………………………………………………. 2.6%Par value …………………………………...

Q: HHH Corporation manufactures automobile engines. In 2018, the treasurer at

HHH Corporation manufactures automobile engines. In 2018, the treasurer at HHH decided to invest the company’s surplus funds in the commodities market. She intended for it to be a short-term investmen...

Q: The tax bracket and holdings of your client are as follows:

The tax bracket and holdings of your client are as follows: Federal tax bracket = 33% During the 12 months from June 30 last year through June 30 this year, the portfolio earned, in annual yield and...

Q: A $1,000 bond originally issued at par maturing in

A $1,000 bond originally issued at par maturing in exactly 10 years bears a coupon rate of 8 percent compounded annually and a market price of $1,147.20. The indenture agreement provides that the bond...

Q: Andrea (see E13.1) has studied the information you

Andrea (see E13.1) has studied the information you gave her in that exercise and has come to you with more statements about corporations. 1. Corporation management is both an advantage and a disadvant...

Q: The following financial information is available for Plummer Corporation.

The following financial information is available for Plummer Corporation. The weighted-average number of shares of common stock outstanding was 80,000 for 2019 and 100,000 for 2020. Instructions Ca...

Q: This financial information is available for Klinger Corporation. /

This financial information is available for Klinger Corporation. The weighted-average number of shares of common stock outstanding was 180,000 for 2019 and 150,000 for 2020. Instructions Calculate...

Q: On January 1, 2020, Frontier Corporation had $1,

On January 1, 2020, Frontier Corporation had $1,000,000 of common stock outstanding that was issued at par. It also had retained earnings of $750,000. The company issued 40,000 shares of common stock...

Q: On October 31, the stockholders’ equity section of Heins Company consists

On October 31, the stockholders’ equity section of Heins Company consists of common stock $500,000 and retained earnings $900,000. Heins is considering the following two courses of action: (1) declari...

Q: On October 1, Little Bobby Corporation’s stockholders’ equity is as follows

On October 1, Little Bobby Corporation’s stockholders’ equity is as follows. Common stock, $5 par value …………………………………………….. $400,000 Paid-in capital in excess of par—common stock …………………….. 25,000 Re...

Q: During 2020, Roblez Corporation had the following transactions and events.

During 2020, Roblez Corporation had the following transactions and events. 1. Declared a cash dividend. 2. Issued par value common stock for cash at par value. 3. Completed a 2-for-1 stock split in wh...

Q: Peck Corporation is authorized to issue 20,000 shares of $

Peck Corporation is authorized to issue 20,000 shares of $50 par value, 10% preferred stock and 125,000 shares of $5 par value common stock. On January 1, 2020, the ledger contained the following stoc...

Q: On January 1, 2020, Geff rey Corporation had the following

On January 1, 2020, Geff rey Corporation had the following stockholders’ equity accounts. Common Stock ($20 par value, 60,000 shares issued and outstanding) …………… $1,200,000 Paid-in Capital in Excess...

Q: The post-closing trial balance of Storey Corporation at December 31

The post-closing trial balance of Storey Corporation at December 31, 2020, contains the following stockholders’ equity accounts. Preferred Stock (15,000 shares issued) ……………………………………………….. $ 750,000...

Q: On January 1, 2020, Ven Corporation had the following stockholders’

On January 1, 2020, Ven Corporation had the following stockholders’ equity accounts. Common Stock (no par value, 90,000 shares issued and outstanding) ………………… $1,600,000 Retained Earnings ……………………………...

Q: The stockholders’ equity accounts of Gonzalez, Inc., at January 1

The stockholders’ equity accounts of Gonzalez, Inc., at January 1, 2020, are as follows. Preferred Stock, no par, 4,000 shares issued ……………………………………………. $400,000 Common Stock, no par, 140,000 shares...

Q: Jurgens Company has had 4 years of net income. Due to

Jurgens Company has had 4 years of net income. Due to this success, the market price of its 400,000 shares of $3 par value common stock has increased from $12 per share to $46. During this period, pai...

Q: Land appraised at $80,000 is purchased by issuing 1

Land appraised at $80,000 is purchased by issuing 1,000 shares of $20 par value common stock. The market price of the shares at the time of the exchange, based on active trading in the securities mark...

Q: Diaz Inc.’s common stock has a par value of $

Diaz Inc.’s common stock has a par value of $1 and a current market price of $15. Explain why these amounts are different.

Q: What factors help determine the market price of stock?

What factors help determine the market price of stock?

Q: Emko Inc.’s common stock has a par value of $

Emko Inc.’s common stock has a par value of $1, a book value of $24, and a current market price of $18. Explain why these amounts are all different.

Q: Gorton Corporation has 30,000 shares of $10 par value

Gorton Corporation has 30,000 shares of $10 par value common stock outstanding when it announces a 2-for-1 stock split. Before the split, the stock had a market price of $120 per share. After the spli...

Q: Lei Inc.’s $10 par value common stock is actively

Lei Inc.’s $10 par value common stock is actively traded at a market price of $15 per share. Lei issues 5,000 shares to purchase land advertised for sale at $85,000. Journalize the issuance of the sto...

Q: Langley Corporation has 50,000 shares of $10 par value

Langley Corporation has 50,000 shares of $10 par value common stock outstanding. It declares a 15% stock dividend on December 1 when the market price per share is $16. The dividend shares are issued o...

Q: The stockholders’ equity section of Pretzer Corporation consists of common stock

The stockholders’ equity section of Pretzer Corporation consists of common stock ($10 par) $2,000,000 and retained earnings $500,000. A 10% stock dividend (20,000 shares) is declared when the market p...

Q: Before preparing financial statements for the current year, the chief accountant

Before preparing financial statements for the current year, the chief accountant for Toso Company discovered the following errors in the accounts. 1. The declaration and payment of $50,000 cash divide...

Q: Newland Company reported retained earnings at December 31, 2019, of

Newland Company reported retained earnings at December 31, 2019, of $310,000. Newland had 200,000 shares of common stock outstanding at the beginning of 2020. The following transactions occurred durin...

Q: Plaintiff Tandrin Aviation Holdings Ltd. (Tandrin) agreed to sell

Plaintiff Tandrin Aviation Holdings Ltd. (Tandrin) agreed to sell a Bombardier executive jet aircraft to Aero Toy Store, L.L.C. (ATS) for U.S. $31.75 million. ATS paid a U.S. $3 million deposit to an...

Q: National Park Bank issued a letter of credit addressed to Ronconi &

National Park Bank issued a letter of credit addressed to Ronconi & Millar, beneficiary, at the request of its account party, Sun Herald, “covering the shipment of 1,322 tons of newsprint paper in 72½...

Q: Part I Debby Kauff man and her two colleagues, Jamie Hiatt

Part I Debby Kauff man and her two colleagues, Jamie Hiatt and Ella Rincon, are personal trainers at an upscale health spa/resort in Tampa, Florida. They want to start a health club that specializes i...

Q: Moby Inc. is considering two alternatives to finance its construction of

Moby Inc. is considering two alternatives to finance its construction of a new $2 million plant. a. Issuance of 200,000 shares of common stock at the market price of $10 per share. b. Issuance of $2 m...

Q: The following are two independent situations. 1. Gambino Cosmetics

The following are two independent situations. 1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2020. On June 30,...

Q: Here is the income statement for Myers, Inc.

Here is the income statement for Myers, Inc. Additional information: 1. Common stock outstanding January 1, 2020, was 32,000 shares, and 40,000 shares were outstanding at December 31, 2020. 2. The m...

Q: Heidebrecht Design acquired 20% of the outstanding common stock of Quayle

Heidebrecht Design acquired 20% of the outstanding common stock of Quayle Company on January 1, 2020, by paying $800,000 for the 30,000 shares. Quayle declared and paid $0.30 per share cash dividends...

Q: PepsiCo’s financial statements are presented in Appendix B. Financial statements of

PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. The complete annual reports of PepsiCo and Coca...

Q: Amazon.com, Inc.’s financial statements are presented in

Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. The complete annual reports of Amazon...

Q: Ken Iwig is the president, founder, and majority owner of

Ken Iwig is the president, founder, and majority owner of Olathe Medical Corporation, an emerging medical technology products company. Olathe is in dire need of additional capital to keep operating an...

Q: The following financial information is for Priscoll Company. /

The following financial information is for Priscoll Company. Additional information: 1. Inventory at the beginning of 2019 was $115,000. 2. Accounts receivable (net) at the beginning of 2019 were $8...

Q: Condensed balance sheet and income statement data for Jergan Corporation are presented

Condensed balance sheet and income statement data for Jergan Corporation are presented here. Additional information: 1. The market price of Jergan’s common stock was $7.00, $7.50,...

Q: Stalberg Company’s beginning inventory and pur chases during the fiscal year ended

Stalberg Company’s beginning inventory and pur chases during the fiscal year ended December 31, 20--, were as follows: There are 10 units of inventory on hand on December 31. 1. Ca...

Q: Douglas Company’s beginning inventory and purchases during the fiscal year ended December

Douglas Company’s beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: REQUIRED 1. Calculate the total amount to be assigned to the end...

Q: Refer to the financial statements in Problem 24-8A.

Refer to the financial statements in Problem 24-8A. Problem 24-8A: Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as fol...

Q: Based on the financial statement data in Exercise 24-1A,

Based on the financial statement data in Exercise 24-1A, Exercise 24-1A: Based on the comparative income statement and balance sheet of Cowan Kitchen Counters, Inc., that follow, compute the follow...

Q: Bouie Company’s beginning inventory and purchases during the fiscal year ended December

Bouie Company’s beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: 1. Calculate the total amount to be assigned to the ending invent...

Q: Company’s beginning inventory and purchases during the fiscal year ended December 31

Company’s beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: REQUIRED 1. Calculate the total amount to be assigned to the ending inve...

Q: Refer to the financial statements in Problem 24-8B.

Refer to the financial statements in Problem 24-8B. Problem 24-8B: Amounts from the comparative income statement and balance sheet of Johnson Stores, Inc., for the last two years are as follows: RE...

Q: Based on the financial statement data in Exercise 24-1B,

Based on the financial statement data in Exercise 24-1B, Exercise 24-1B: Based on the comparative income statement and balance sheet for Falcon Designers, Inc., given on the next page, compute the...

Q: What issues affect your faith in a transfer price as a substitute

What issues affect your faith in a transfer price as a substitute for a market price in measuring a profit center’s performance?

Q: Brenda is considering an investment in the ordinary shares of either Baker

Brenda is considering an investment in the ordinary shares of either Baker plc or Grant plc. Both companies operate in the same sector of industry and both prepare accounts to 30 September each year....

Q: Petitioner Erica P. John Fund, Inc. (EPJ Fund

Petitioner Erica P. John Fund, Inc. (EPJ Fund), is the lead plaintiff in a securities fraud class action filed against Halliburton Co. and one of its executives (collectively Halliburton). EPJ Fund al...

Q: The Bailey Corporation, a manufacturer of medical supplies and equipment,

The Bailey Corporation, a manufacturer of medical supplies and equipment, is planning to sell its shares to the general public for the first time. The firm’s investment banker, Rober...

Q: Dr. Robert Grossman founded Electro Cardio Systems Inc. (ECS

Dr. Robert Grossman founded Electro Cardio Systems Inc. (ECS) in 2001. The principal purpose of the firm was to engage in the research and development of heart pump devices. Although the firm did not...

Q: Fondren Exploration Ltd. has 1,000 convertible bonds ($1

Fondren Exploration Ltd. has 1,000 convertible bonds ($1,000 par value) outstanding, each of which may be converted to 50 shares of stock. The $1 million worth of bonds has 25 years to maturity. The c...

Q: The Pioneer Petroleum Corporation has a bond outstanding with an $85

The Pioneer Petroleum Corporation has a bond outstanding with an $85 annual interest payment, a market price of $800, and a maturity date in five years. Find the following: a. The coupon rate. b. The...

Q: Preston Corporation has a bond outstanding with an $80 annual interest

Preston Corporation has a bond outstanding with an $80 annual interest payment, a market price of $1,250, and a maturity date in 10 years. Assume the par value of the bonds is $1,000. Find the followi...

Q: Walker Machine Tools has 5.5 million shares of common stock

Walker Machine Tools has 5.5 million shares of common stock outstanding. The current market price of Walker common stock is $52 per share rights-on. The company’s net income this year is $17.5 million...

Q: 1. You go to Games Galore Store to buy a copy

1. You go to Games Galore Store to buy a copy of the latest installment in the “Furious Finale” video game series. It is available only at the manufacturer’s price, which is the same price at all loca...

Q: New Castle Company common stock has a beta of 1.50

New Castle Company common stock has a beta of 1.50. The stock currently pays a dividend of $3 per share. The risk-free rate is 8 percent, and the market risk premium is expected to be 8.0 percent. The...

Q: Suppose that fixed costs for a firm in the automobile industry (

Suppose that fixed costs for a firm in the automobile industry (start-up costs of factories, capital equipment, and so on) are $5 billion and that variable costs are equal to $17,000 per finished auto...

Q: Pick the best price that you want to pay for a product

Pick the best price that you want to pay for a product. Is zero reserved only for those who believe in Santa Claus? Recall the famous saying by economist Milton Friedman that “there’s no...

Q: Explain why the market price may not be the same as the

Explain why the market price may not be the same as the equilibrium price.

Q: Explain how a bond can be classified as a fixed-income

Explain how a bond can be classified as a fixed-income security when the yield to-maturity can fluctuate significantly over time, depending on the market price of the bond.

Q: Recently the high and low market prices of Canadian Pacific Limited’s debentures

Recently the high and low market prices of Canadian Pacific Limited’s debentures (see problem 1) were $790 and $475, respectively. Determine the yield-to-maturity of one of these debentures if it was...

Q: Consider the Leverage Unlimited, Inc., zero coupon bonds of 2020

Consider the Leverage Unlimited, Inc., zero coupon bonds of 2020. The bonds were issued in 2002 for $100. Determine the yield-to-maturity (to the nearest 1 10 = of 1 percent) if the bonds are purchase...

Q: Calculate book value per share, dividend yield, dividend payout,

Calculate book value per share, dividend yield, dividend payout, market‐to‐book ratio, earnings per share, and price‐to‐earnings ratio given the following information: shareholders’ equity is $945,000...

Q: A firm in a purely competitive industry is currently producing 1,

A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500...

Q: Assume that the most efficient production technology available for making vitamin pills

Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vi...

Q: Suppose that the paper clip industry is perfectly competitive. Also assume

Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: a...

Q: A perfectly competitive firm that makes car batteries has a fixed cost

A perfectly competitive firm that makes car batteries has a fixed cost of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm’s minimum AVC is $105 per ba...

Q: A purely competitive firm finds that the market price for its product

A purely competitive firm finds that the market price for its product is $20. It has a fixed cost of $100 and a variable cost of $10 per unit for the first 50 units and then $25 per unit for all succe...

Q: Karen runs a print shop that makes posters for large companies.

Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $250. Her variable costs are $1,0...

Q: The Ewing Distribution Company is planning a $100 million expansion of

The Ewing Distribution Company is planning a $100 million expansion of its chain of discount service stations to several neighboring states. This expansion will be financed, in part, with debt issued...

Q: Jenkins Resources Inc. has the following capital structure:

Jenkins Resources Inc. has the following capital structure: Financing Source………….…..Proportion of Capital Structure Debentures (9% coupon, $1,000 par value, 12-year maturity)…………….…………………...

Q: Tucker Manufacturing Company has a beta estimated at 1.0.

Tucker Manufacturing Company has a beta estimated at 1.0. The risk-free rate is 6 percent and the expected market return is 12 percent. Tucker expects to pay a $4 dividend next year (D1 = $4). This di...

Q: Gandha’s Pharmaceutical Corporation’s beta is 1.5. The current risk

Gandha’s Pharmaceutical Corporation’s beta is 1.5. The current risk-free rate is 4.5 percent and the market risk premium is 9 percent. Gandha currently (time 0) pays a dividend of $2 per share. This d...

Q: Phoenix Tool Company and Denver Tool Company have had a very similar

Phoenix Tool Company and Denver Tool Company have had a very similar record of earnings performance over the past eight years. Both firms are in the same industry and, in fact, compete directly with e...

Q: The Sweet Times Candy Company has the following equity accounts on its

The Sweet Times Candy Company has the following equity accounts on its balance sheet: Common stock ($1 par, 500,000 shares)….…………..$ 500,000 Contributed capital in excess of par…………….……….2,000,000 Ret...

Q: Disher Cotton Farms is a large cotton producer located near Lubbock,

Disher Cotton Farms is a large cotton producer located near Lubbock, Texas. Each year Disher plants its fields in cotton and then waits until the fall before the cotton is picked and sold. Disher know...

Q: The Manchester Corporation has warrants presently outstanding, and each warrant entitles

The Manchester Corporation has warrants presently outstanding, and each warrant entitles the holder to purchase one share of the company’s common stock at an exercise price of $20 a share. If the mark...

Q: Oswego Manufacturing Company has decided to sell additional common stock through a

Oswego Manufacturing Company has decided to sell additional common stock through a rights offering. The company has 50 million shares outstanding and plans to sell an additional 5 million shares throu...

Q: The Oil City Company plans to sell an additional 1 million shares

The Oil City Company plans to sell an additional 1 million shares of common stock through a rights offering. The company currently has 12 million shares outstanding. Each shareholder will receive one...

Q: The Findlay Company has debentures outstanding (par value ¼ $1

The Findlay Company has debentures outstanding (par value ¼ $1,000) that are convertible into common stock at a price of $50 per share. The convertible bonds have a coupon interest rate of 9 percent a...

Q: Five years ago, in conjunction with a financial restructuring, Laurenberg

Five years ago, in conjunction with a financial restructuring, Laurenberg Electric sold a $100 million issue of bonds at a coupon interest rate of 12 percent. Each bond came with 30 detachable warrant...

Q: 1. Jason bought 46,000 shares of CTB Inc.

1. Jason bought 46,000 shares of CTB Inc. on January 12, 2015. At that time, CTB Inc. had 2 million common shares outstanding. Calculate the portion of CTB Inc. that Jason owns. a. 2.3 percent b. 1.4...

Q: What is the slope of the CML, and why can it

What is the slope of the CML, and why can it be reviewed as the market price of risk for efficient portfolios according to the CML?

Q: Investors demand a rate of return of 15 percent on Sweet Life

Investors demand a rate of return of 15 percent on Sweet Life Food Inc. ’ s common shares. These shares are currently trading at $20 per share. Dividend payout for the current year is expected to be $...

Q: The Atlantic Company is a multidivisional company. Its managers have full

The Atlantic Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub...

Q: Computech Company operates as a decentralized multidivisional electronics company. Its laptop

Computech Company operates as a decentralized multidivisional electronics company. Its laptop division buys most of its monitors from the screen division. The screen division’s incremental costs for m...

Q: Sun Motors Inc. operates as a decentralized multidivisional car company.

Sun Motors Inc. operates as a decentralized multidivisional car company. Its safety division buys most of its airbags from the airbag division. The airbag division’s incremental costs for manufacturin...

Q: The Pacific Company is a multidivisional company. Its managers have full

The Pacific Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub-...

Q: Future Industries operates as a decentralized, vertically integrated, multidivisional company

Future Industries operates as a decentralized, vertically integrated, multidivisional company. One of its divisions, the systems division, manufactures scientific instruments and uses the products of...

Q: Podrive Company manufactures computer hard drives. The market for hard drives

Podrive Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $45. Podrive would like a profit of $15 per dri...

Q: Harmer Inc. is now a successful company. In the early

Harmer Inc. is now a successful company. In the early days (before it became profitable), it issued incentive stock options (ISOs) to its employees. Now Harmer is trying to decide whether to issue non...

Q: Santini’s new contract for 2018 indicates the following compensation and benefits:

Santini’s new contract for 2018 indicates the following compensation and benefits: Benefit Description Amount  Salary $130,000  Health insurance $9,000  Restricted stock granted $2,500  B...

Q: What is the required rate of return on a preferred stock with

What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 7% of par, and a current market price of (a) $30, (b) $40, (c) $50,and (d) $70 (assume the ma...

Q: The Jimenez Corporation’s forecasted 2017 financial statements follow, along with some

The Jimenez Corporation’s forecasted 2017 financial statements follow, along with some industry average ratios. Calculate Jimenez’s 2017 forecasted ratios, compare...

Q: Winchell Investment Advisors is evaluating the capital structure of Ojai Foods.

Winchell Investment Advisors is evaluating the capital structure of Ojai Foods. Ojai’s balance sheet indicates that the firm has $50 million in total liabilities. Ojai has only $40 million in short- a...

Q: Chaney’s Fatburner Gyms, Inc., operates a chain of exercise facilities

Chaney’s Fatburner Gyms, Inc., operates a chain of exercise facilities throughout the Midwest. The firm appeals to middle-aged men who suffer from obesity problems and want to improve their health by...

Q: Minelli Enterprises uses large amounts of copper in the manufacture of ceiling

Minelli Enterprises uses large amounts of copper in the manufacture of ceiling fans. The firm has been very concerned about the detrimental impact of rising copper prices on its earnings and has decid...

Q: Springfield Learning sold zero-coupon bonds (bonds that don’t pay

Springfield Learning sold zero-coupon bonds (bonds that don’t pay any interest—instead, the bondholder gets just one payment, coming when the bond matures, from the issuer) and received $900 for each...

Q: The common stock of Placo Enterprises had a market price of $

The common stock of Placo Enterprises had a market price of $12 on the day you purchased it just one year ago. During the past year, the stock paid a $1 dividend and closed at a price of $14. What rat...

Q: A 14-year, $1,000 par value Fingen

A 14-year, $1,000 par value Fingen bond pays 9 percent interest annually. The market price of the bond is $1,100, and the market’s required yield to maturity on a comparable-risk bond is 10 percent. a...

Q: The seven-year $1,000 par bonds of Vail

The seven-year $1,000 par bonds of Vail Inc. pay 9 percent interest. The market’s required yield to maturity on a comparable-risk bond is 7 percent. The current market price for the bond is $1,100. a....

Q: The 15-year, $1,000 par value bonds

The 15-year, $1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is $1,085, and the market’s required yield to maturity on a comparable-risk bond is...

Q: Stanley, Inc., issues a 15-year $1,

Stanley, Inc., issues a 15-year $1,000 bond that pays $85 annually. The market price for the bond is $960. The market’s required yield to maturity on a comparable-risk bond is 9 percent. a. What is th...

Q: The market price is $900 for a 10-year bond

The market price is $900 for a 10-year bond ($1,000 par value) that pays 8 percent annual interest but makes interest payments on a semiannual basis (4 percent semiannually). What is the bond’s yield...

Q: A bond’s market price is $750. It has a $

A bond’s market price is $750. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 9 percent annual interest but makes its interest payments semiannually. What is the...

Q: You are working in the Finance Department of Ranch Manufacturing, and

You are working in the Finance Department of Ranch Manufacturing, and your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipm...

Q: You are working as a consultant to the Lulu Athletic Clothing Company

You are working as a consultant to the Lulu Athletic Clothing Company, and you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse fa...

Q: You have just been hired to compute the cost of capital for

You have just been hired to compute the cost of capital for debt, preferred stock, and common stock for the Mindflex Corporation. a. Cost of debt: Because Mindflex’s bonds do not trade very frequently...

Q: The Boston Brewery Corporation is a craft brewer of premium beers.

The Boston Brewery Corporation is a craft brewer of premium beers. The firm is planning on issuing common stock at a market price of $13 a share. Last year the firm paid an annual dividend of $1.45, a...

Q: Falon Corporation is issuing new common stock at a market price of

Falon Corporation is issuing new common stock at a market price of $28. Dividends last year were $1.30 and are expected to grow at an annual rate of 7 percent forever. What is Falon’s cost of common e...

Q: The Evrett Company operates a simple chemical process to convert a single

The Evrett Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a...

Q: The Mornay Company manufactures telecommunications equipment at its plant in Toledo,

The Mornay Company manufactures telecommunications equipment at its plant in Toledo, Ohio. The company has marketing divisions throughout the world. A Mornay marketing division in Vienna, Austria, imp...

Q: The California Instrument Company (CIC) consists of the semiconductor division

The California Instrument Company (CIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit center. The semiconductor division empl...

Q: Europa, Inc., has two divisions, A and B,

Europa, Inc., has two divisions, A and B, that manufacture expensive bicycles. Division A produces the bicycle frame, and division B assembles the rest of the bicycle onto the frame. There is a market...

Q: Refer to Problem 22-28. Required:

Refer to Problem 22-28. Required: 1. Suppose the manager of division A has the option of (a) cutting the external price to $195, with the certainty that sales will rise to 1,000 units or (b) maintain...

Q: Crango Products is a cranberry cooperative that operates two divisions, a

Crango Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into cranb...

Q: Industrial Diamonds, Inc., based in Los Angeles, has two

Industrial Diamonds, Inc., based in Los Angeles, has two divisions: South African mining division, which mines a rich diamond vein in South Africa U.S. processing division, which polishes raw diamonds...

Q: Jeremiah Industries manufactures high-grade aluminum luggage made from recycled metal

Jeremiah Industries manufactures high-grade aluminum luggage made from recycled metal. The company operates two divisions: metal recycling and luggage fabrication. Each division operates as a decentra...

Q: 1. Which of the following statements about a call option is

1. Which of the following statements about a call option is false? a. A call option is the right, not the obligation, to buy the underlying asset. b. A call option is in the money if the asset price i...

Q: 1. Which of the following statements is false? a

1. Which of the following statements is false? a. CCA recapture occurs when the salvage value is greater than the ending UCC for the asset or asset class. b. Capital gains occur when the salvage value...

Q: 1. Which of the following statements about takeovers is false?

1. Which of the following statements about takeovers is false? a. Mergers create a new firm, while acquisitions do not. b. Both mergers and acquisitions require two‐thirds votes from both firms. c. In...

Q: Calculate the market price of the firm’ s common shares using a

Calculate the market price of the firm’ s common shares using a relative valuation approach. (Round your answer to one decimal.)

Q: The balance sheets of a bidder and target companies are as follows

The balance sheets of a bidder and target companies are as follows: The tax rate for both companies is 25 percent. The acquisition will be accounted for using the purchase method. Prior to the acquisi...

Q: GG Inc. is now considering replacing some old equipment. The

GG Inc. is now considering replacing some old equipment. The market price of the old equipment is $50,000 and the salvage value at the end of five years is $15,000. The new equipment will cost $100,00...

Q: Calculate the post‐merger EPS and market value of equity,

Calculate the post‐merger EPS and market value of equity, assuming no synergies arise in the following acquisition settled in cash. Analyze the difference, if there is any. Further,...

Q: Describe the possible market price change after a tender offer and the

Describe the possible market price change after a tender offer and the possible reasons.

Q: Phylum Plants’ stock is currently trading at a price of $55

Phylum Plants’ stock is currently trading at a price of $55 per share. The company is considering the acquisition of Taxonomy Central, whose stock is currently trading at $20 per share. The transactio...

Q: When the market price of the stock rises above the conversion price

When the market price of the stock rises above the conversion price, why may a convertible security not be converted? How can the call feature be used to force conversion in this situation? What is an...

Q: Marla’s Cafe is attempting to acquire the Victory Club. Certain financial

Marla’s Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Marla’s Cafe has suffi...

Q: Cleveland Corporation is interested in acquiring Lewis Tool Company by swapping 0

Cleveland Corporation is interested in acquiring Lewis Tool Company by swapping 0.4 share of its stock for each share of Lewis stock. Certain financial data on these companies are given in the followi...

Q: Calculate the ratio of exchange (1) of shares and (

Calculate the ratio of exchange (1) of shares and (2) in market price for each of the cases shown in the following table. What does each ratio signify? Explain.

Q: Data for Henry Company and Mayer Services are given in the following

Data for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Co...

Q: Susan Michaels is evaluating the Burton Tool Company’s common stock and warrants

Susan Michaels is evaluating the Burton Tool Company’s common stock and warrants to choose the better investment. The firm’s stock is currently selling for $16 per share; its warrants to purchase thre...

Q: Tom Baldwin can invest $6,300 in the common stock

Tom Baldwin can invest $6,300 in the common stock or the warrants of Lexington Life Insurance. The common stock is currently selling for $30 per share. Its warrants, which provide for the purchase of...

Q: Edna Recording Studios Inc. reported earnings available to common stock of

Edna Recording Studios Inc. reported earnings available to common stock of $4,200,000 last year. From those earnings, the company paid a dividend of $1.26 on each of its 1,000,000 common shares outsta...

Q: With the market price of gold at C$1,562

With the market price of gold at C$1,562.50 per ounce (C$ stands for Canadian dollars), Maritime Resources Corp., a Canadian mining firm, would like to assess the financial feasibility of reopening an...

Q: Recall from P11-28 that when the market price of gold

Recall from P11-28 that when the market price of gold is C$1,562.50 per ounce (C$ stands for Canadian dollars) the NPV for Maritime Resources Corp.—a Canadian mining firm that was reopening an old gol...

Q: Sarah Warren currently holds 400 shares of Nutri-Foods. The

Sarah Warren currently holds 400 shares of Nutri-Foods. The firm has 40,000 shares outstanding. The firm most recently had earnings available for common stockholders of $80,000, and its stock has been...

Q: Security Data Company has outstanding 50,000 shares of common stock

Security Data Company has outstanding 50,000 shares of common stock currently selling at $40 per share. The firm most recently had earnings available for common stockholders of $120,000, but it has de...

Q: The board of Wicker Home Health Care Inc. is exploring ways

The board of Wicker Home Health Care Inc. is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appeali...

Q: The following financial data on the Bond Recording Company are available:

The following financial data on the Bond Recording Company are available: The firm is currently considering whether it should use $400,000 of its earnings to pay cash dividends of $1 per share or to...

Q: Harte Textiles Inc., a maker of custom upholstery fabrics, is

Harte Textiles Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth of its stockholders during a cyclical downturn in the home furnishings business. The company has mai...

Q: Columbia Paper has the following stockholders’ equity account. The firm’s common

Columbia Paper has the following stockholders’ equity account. The firm’s common stock has a current market price of $30 per share. a. Show the effects on Columbi...

Q: The current stockholders’ equity account for Hilo Farms is as follows:

The current stockholders’ equity account for Hilo Farms is as follows: Hilo has announced plans to issue an additional 5,000 shares of common stock as part of its stock dividend pl...

Q: Find the conversion (or stock) value for each of the

Find the conversion (or stock) value for each of the $1,000-par-value convertible bonds described in the following table.

Q: Eastern Clock Company has an outstanding issue of convertible bonds with a

Eastern Clock Company has an outstanding issue of convertible bonds with a $1,000 par value. These bonds are convertible into 50 shares of common stock. They have a 10% annual coupon rate and a 20-yea...

Q: Craig’s Cake Company has an outstanding issue of 15-year convertible

Craig’s Cake Company has an outstanding issue of 15-year convertible bonds with a $1,000 par value. These bonds are convertible into 80 shares of common stock. They have an 8% annual coupon rate, wher...

Q: Kent Hotels has warrants that allow the purchase of three shares of

Kent Hotels has warrants that allow the purchase of three shares of its outstanding common stock at $50 per share. The common stock price per share and the market value of the warrant associated with...

Q: a. Kitchener Consumer Products plans to issue 25‐year bonds

a. Kitchener Consumer Products plans to issue 25‐year bonds with an 7‐percent coupon rate, with coupons paid semi‐annually and a par value of $1,000. After tax flotation costs (issuing and underwritin...

Q: 1. Which of the following does not appear in the share

1. Which of the following does not appear in the share structure of a firm? a. Preferred shares b. Common shares c. Limited voting shares d. None of the above 2. Which of the following statements abo...

Q: In December 2015, Collingwood Corp. decided to issue 100,

In December 2015, Collingwood Corp. decided to issue 100,000 convertible bonds, maturing in December 2025. The bonds have a face value of $1,000 and promise an annual coupon payment of 5.75 percent. T...

Q: A firm’s common shares currently trade at $20 per share.

A firm’s common shares currently trade at $20 per share. The firm has warrants outstanding that entitle the holder to purchase two shares at an exercise price of $18 per share. The expiry date is two...

Q: 1. Which of the following statements is false? a

1. Which of the following statements is false? a. Financing total assets is called the financial structure decision. b. Capital structure is how invested capital is financed. c. The financial structur...

Q: What is the market price and market‐to‐book ratio

What is the market price and market‐to‐book ratio, assuming the firm’s stock is a perpetuity and all earnings are paid out as cash dividends (i.e., the retention rate is zero)?

Q: Calculate the cost of issuing new equity for a firm, assuming

Calculate the cost of issuing new equity for a firm, assuming issue costs are 6 percent of the share price after taxes; market price per share $50; current dividend $3.75; and the constant growth rate...

Q: A firm has common shares outstanding with a discount rate of 10

A firm has common shares outstanding with a discount rate of 10.5 percent. The current market price is $25. The company just paid a dividend of $1.20 per share. What is the per‐share implied growth ra...

Q: Calculate the cost of equity using the constant growth DDM given the

Calculate the cost of equity using the constant growth DDM given the following: current dividend $3; payout ratio 0.5 (assume it is not changing); ROE 12%; and the current market price of the stock $2...

Q: 1. Dividend‐payout ratio is defined as: a

1. Dividend‐payout ratio is defined as: a. the dividend yield plus the capital gains yield. b. dividends per share divided by earnings per share. c. dividends per share divided by income per share. d....

Q: What is the market price per share if the next period’s dividend

What is the market price per share if the next period’s dividend = $2.50, P 1 = $30, and K = 16%?

Q: A firm follows a strict residual dividend policy. This firm will

A firm follows a strict residual dividend policy. This firm will have profits of $800,000 this year. After screening all available investment projects, the firm has decided to take three out of the 10...

Q: Gene owns 1,200 shares of XYX Corp. The company

Gene owns 1,200 shares of XYX Corp. The company instituted a 1-for-10 reverse stock split on November 7. The pre-split market price per share was $1.20. a. How many shares did Gene hold after the spl...

Q: Mike owns 2,400 shares of JXV. The company instituted

Mike owns 2,400 shares of JXV. The company instituted a 1-for-8 reverse stock split on October 17. The pre-split market price per share was $2.13. a. How many shares did Mike hold after the split? b...

Q: Verify that Jon’s method works to determine the post-split price

Verify that Jon’s method works to determine the post-split price and shares outstanding for HVC, which executed a 4-for-1 split on July 10 with 22,676,800 outstanding shares and a market price of $203...

Q: Define each of the following terms: a. Proxy;

Define each of the following terms: a. Proxy; proxy fight; preemptive right; classified stock; founders’ shares b. Free cash flow valuation model, value of operations; non operating assets c. Constant...

Q: The Jimenez Corporation’s forecasted 2019 financial statements follow, along with some

The Jimenez Corporation’s forecasted 2019 financial statements follow, along with some industry average ratios. Calculate Jimenez’s 2019 forecasted ratios, compare...

Q: Hayes Industries Corp. purchased the following assets and also constructed a

Hayes Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year using a variety of financing alternatives. Assets 1 and 2 These assets...

Q: Best Corp., a public company using IFRS, signed a long

Best Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $1 million. At December 31, 2016, t...

Q: OG Limited (OG) is in the oil and gas business

OG Limited (OG) is in the oil and gas business. It spends quite a bit of money each year exploring for new wells. Currently, it has several wells that are in the production phases. The company’s share...

Q: Grappa Grapes Inc. (GGI) grows grapes and produces sparkling

Grappa Grapes Inc. (GGI) grows grapes and produces sparkling wines. The company is located in a very old area of town with easy access to fertile farmland that is excellent for growing grapes. It is o...

Q: At December 31, 2017, Igor Ltd. has outstanding non

At December 31, 2017, Igor Ltd. has outstanding non-cancellable purchase commitments for 32,500 litres of raw material at $2.00 per litre. The material will be used in Igor’s manufacturing process, an...

Q: Arantxa Corporation made the following purchases of investments during 2017, the

Arantxa Corporation made the following purchases of investments during 2017, the first year in which Arantxa invested in equity securities: 1. On January 15, purchased 9,000 shares of Nirmala Corp.’s...

Q: The following are two independent situations. Situation 1: Lauren

The following are two independent situations. Situation 1: Lauren Inc. received dividends from its common share investments during the year ended December 31, 2017, as follows: • A cash dividend of $1...

Q: A machine’s invoice price is $40,000. Various other

A machine’s invoice price is $40,000. Various other costs relating to the acquisition and installation of the machine—including transportation, electrical wiring, a special base, and so on—amount to $...

Q: Desrosiers Ltd. had the following long-term receivable account balances

Desrosiers Ltd. had the following long-term receivable account balances at December 31, 2016: Notes receivable……………………………………….$1,800,000 Notes receivable—Employees………………………..400,000 Transactions dur...

Q: Nav-Go Enterprises Inc. produces aeronautical navigation equipment. Navo

Nav-Go Enterprises Inc. produces aeronautical navigation equipment. Navo-Go Enterprises' stockholders’ equity accounts, with balances on January 1, 20Y1, are as follows: Common Stock, $5 stated...

Q: Amazon .com, Inc. is one of the largest Internet

Amazon .com, Inc. is one of the largest Internet retailers in the world. Walmart is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart sells thr...

Q: Alpine Energy Corporation has 1,500,000 shares of $

Alpine Energy Corporation has 1,500,000 shares of $40 par common stock outstanding. On August 2, Alpine Energy declared a 4% stock dividend to be issued October 8 to stockholders of record on Septembe...

Q: The financial statements for Nike, Inc. , are presented in

The financial statements for Nike, Inc. , are presented in Appendix E at the end of the text. The following additional information is available (in thousands): Accounts receivable at May 31, 2013…………...

Q: Storm, Inc. purchased the following available-for-sale

Storm, Inc. purchased the following available-for-sale securities during 20Y9, its first year of operations: The market price per share for the available-for-sale security portfolio o...

Q: Use the data in Problem 8 to determine the change, from

Use the data in Problem 8 to determine the change, from 2012 to 2015, in GE’s a. book debt-equity ratio. b. market debt-equity ratio. Data from Problem 8: In early 2012, General Electric (GE) had a...

Q: Your brother Joe is a surgeon who suffers badly from the overconfidence

Your brother Joe is a surgeon who suffers badly from the overconfidence bias. He loves to trade stocks and believes his predictions with 100% confidence. In fact, he is uninformed like most investors....

Q: What was the change in Global Conglomerate’s book value of equity from

What was the change in Global Conglomerate’s book value of equity from 2014 to 2015 according to Table 2.1? Does this imply that the market price of Global’s shares...

Q: In early 2012, General Electric (GE) had a book

In early 2012, General Electric (GE) had a book value of equity of $116 billion, 10.6 billion shares outstanding, and a market price of $17.00 per share. GE also had cash of $84 billion, and total deb...

Q: The table here shows the no-arbitrage prices of securities A

The table here shows the no-arbitrage prices of securities A and B that we calculated. a. What are the payoffs of a portfolio of one share of security A and one share of security B? b. What is the m...

Q: Suppose security C has a payoff of $600 when the economy

Suppose security C has a payoff of $600 when the economy is weak and $1800 when the economy is strong. The risk-free interest rate is 4%. a. Security C has the same payoffs as which portfolio of the s...

Q: Suppose the current market price of corn is $3.75

Suppose the current market price of corn is $3.75 per bushel. Your firm has a technology that can convert 1 bushel of corn to 3 gallons of ethanol. If the cost of conversion is $1.60 per bushel, at wh...

Q: Champion Telecommunications is restructuring. Currently Champion has no debt outstanding.

Champion Telecommunications is restructuring. Currently Champion has no debt outstanding. After it restructures, debt will be $5 million. The rate offered to bondholders is 10 percent. Champion curren...

Q: 1. A bond that is an unsecured obligation of the issuer

1. A bond that is an unsecured obligation of the issuer—in other words, there are no specific assets pledged as collateral in case the issuer cannot repay the bondholders, is called a. an equipment t...

Q: Alir owns 10,000 shares of Ajax Corp. Her shares

Alir owns 10,000 shares of Ajax Corp. Her shares represent a 10 percent ownership interest in Ajax. Zeta Corp. is interested in acquiring Ajax in a merger, and the board of directors of each corporati...

Q: Mario Bonsetti and Rico Sanchez incorporated Gnarly Vulcan Gear, Inc.

Mario Bonsetti and Rico Sanchez incorporated Gnarly Vulcan Gear, Inc. (GVG), to manufacture windsurfing equipment. Bonsetti owned 60 percent and Sanchez owned 40 percent of the corporation’s stock, an...

Q: Eternal Rest Limited (ERL) is a public company; its

Eternal Rest Limited (ERL) is a public company; its shares are traded on a stock exchange in Canada. ERL operates both funeral homes and cemeteries in Canada. Funeral services (casket, flowers, cemete...

Q: Wedding Planners Limited (WP), owned by Anne and Francois Tremblay

Wedding Planners Limited (WP), owned by Anne and Francois Tremblay, provides wedding planning and related services. WP owns a building (the Pavilion) that has been custom-made for hosting weddings. Us...

Q: Canada Cola Inc. (CCI) is a public company engaged

Canada Cola Inc. (CCI) is a public company engaged in the manufacture and distribution of soft drinks across Canada. Its primary product is Canada Cola ("Fresh as a Canadian stream"), which is a top s...

Q: You, CPA, are employed at Beaulieu & Beauregard, Chartered

You, CPA, are employed at Beaulieu & Beauregard, Chartered Professional Accountants. On November 20, Year 3, Dominic Jones, a partner in your firm, sends you the following email: Our firm has been...

Q: Kitchener Mechanical Incorporated is looking to expand its manufacturing facilities and buy

Kitchener Mechanical Incorporated is looking to expand its manufacturing facilities and buy more equipment to meet raised customer demand. The company’s strategy is to build an add-on to the current f...

Q: Khalid Inc. has the following selected financial data:

Khalid Inc. has the following selected financial data: There were no preferred dividends in arrears. (a) Calculate the following ratios for 2017: (1) rate of return on common shareholdersâ...

Q: On January 1, 2017, Blaine Corporation granted 6,000

On January 1, 2017, Blaine Corporation granted 6,000 options to executives. Each option entitles the holder to purchase one share of Blaine’s common shares at $35 per share at any time after January 1...

Q: Redpath Limited purchased 25,000 call options during the year.

Redpath Limited purchased 25,000 call options during the year. The options give the company the right to buy its own common shares for $4 each. The average market price during the year was $7 per shar...

Q: Use the same information as in BE17-19 and assume that

Use the same information as in BE17-19 and assume that Redpath also wrote put options that allow the holder to sell 25,000 of Redpath’s shares to Redpath at $8 per share. Calculate the incremental sha...

Q: Assume the same information as in BE17-19 except that Redpath

Assume the same information as in BE17-19 except that Redpath purchased put options to give it the option of selling 25,000 of its own common shares for $5 each. How should the options be treated when...

Q: The following information (in $000) has been obtained from

The following information (in $000) has been obtained from Patinka Limited’s financial statements for the fiscal years ended December 31. There are no preferred shares issued by Pa...

Q: Singh Inc., a public company, has been experiencing financial difficulty

Singh Inc., a public company, has been experiencing financial difficulty in the past few years. As a result, the common shares have been trading at a per share price of just over $1. If the stock trad...

Q: What follows are the liabilities and shareholders’ equity sections of the statements

What follows are the liabilities and shareholders’ equity sections of the statements of financial position for Kao Corp. and Bennington Corp. Each has assets totaling $4.2 million....

Q: Laurentian Mills Ltd. had the following shareholders’ equity at January 1

Laurentian Mills Ltd. had the following shareholders’ equity at January 1, 2017. The contributed surplus accounts arose from amounts received in excess of the par value of the shar...

Q: Dadayeva Inc. has $5 million of 6% convertible bonds

Dadayeva Inc. has $5 million of 6% convertible bonds outstanding. Each $1,000 bond is convertible into 50 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2017...

Q: Somerton Corporation had two issues of securities outstanding: common shares and

Somerton Corporation had two issues of securities outstanding: common shares and a 6% convertible bond issue in the face amount of $6 million. Interest payment dates of the bond issue are June 30 and...

Q: The treasurer of Hing Wa Corp. has read on the Internet

The treasurer of Hing Wa Corp. has read on the Internet that the stock price of Ewing Inc. is about to take off. In order to profit from this potential development, Hing Wa purchased a call option on...

Q: On January 2, 2017, Jackson Corporation purchased a call option

On January 2, 2017, Jackson Corporation purchased a call option for $500 on Walter’s common shares. The call option gives Jackson the option to buy 1,000 shares of Walter at a strike price of $30 per...

Q: Refer to the financial statements and accompanying notes of Canadian Tire Corporation

Refer to the financial statements and accompanying notes of Canadian Tire Corporation Limited for its year ended January 3, 2015. The financial statements are available on SEDAR (www.sedar.com). Inst...

Q: On April 1, 2017, Petey Ltd. paid $175

On April 1, 2017, Petey Ltd. paid $175 for a call to buy 700 shares of NorthernTel at a strike price of $27 per share any time during the next six months. The market price of NorthernTel’s shares was...

Q: On January 1, 2017, Fresh Juice Ltd. entered into

On January 1, 2017, Fresh Juice Ltd. entered into a purchase commitment contract to buy 10,000 oranges from a local company at a price of $0.50 per orange anytime during the next year. The contract pr...

Q: Vanstone Corp., a public company, adopted a stock option plan

Vanstone Corp., a public company, adopted a stock option plan on November 30, 2017 that designated 70,000 common shares as available for the granting of options to officers of the corporation at an ex...

Q: Standard Corp’s net income for 2017 is $150,000.

Standard Corp’s net income for 2017 is $150,000. The only potentially dilutive securities outstanding were 1,000 call options issued during 2016, with each option being exercisable for one share at $2...

Q: Howard Corporation earned $480,000 during a period when it

Howard Corporation earned $480,000 during a period when it had an average of 100,000 common shares outstanding. The common shares sold at an average market price of $23 per share during the period. Al...

Q: On January 1, 2017, Waldorf Corporation granted 40,000

On January 1, 2017, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase one share of Waldorf’s common shares at a price of $30 per share. The opt...

Q: LEW Jewellery Corp. uses gold in the manufacture of its products

LEW Jewellery Corp. uses gold in the manufacture of its products. LEW anticipates that it will need to purchase 500 ounces of gold in October 2017 for jewellery that will be shipped for the holiday sh...

Q: Esau Inc. presented the following data: /

Esau Inc. presented the following data: As of January 1, 2017, there were no dividends in arrears. On December 31, 2017, Esau declared and paid the preferred dividend for 2017. Instructions: (a) Ca...

Q: Refer to P16-1, but assume that Hing Wa wrote

Refer to P16-1, but assume that Hing Wa wrote (sold) the call option for a premium of $480 (instead of buying it). Assume that the market price of the shares and the fair value of the option are other...

Q: Brondon Corp. purchased a put option on Mykia common shares on

Brondon Corp. purchased a put option on Mykia common shares on July 7, 2017 for $480. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2018. The followi...

Q: At December 31, 2017, Bouvier Corp. has assets of

At December 31, 2017, Bouvier Corp. has assets of $10 million, liabilities of $6 million, common shares of $2 million (representing 2 million common shares of $1.00 par), and retained earnings of $2 m...

Q: The unclassified statement of financial position accounts for Sorkin Corporation, which

The unclassified statement of financial position accounts for Sorkin Corporation, which is a public company using IFRS, for the year ended December 31, 2016 and its statement of comprehensive income a...

Q: The shareholders’ equity section of Finley Inc. at the beginning of

The shareholders’ equity section of Finley Inc. at the beginning of the current year is as follows: Common shares, 1,000,000 shares authorized, 300,000 shares issued and outstanding………………………………………………...

Q: Guoping Limited provides you with the following condensed statement of financial position

Guoping Limited provides you with the following condensed statement of financial position information: Instructions: (a) For each transaction below, indicate the dollar impact (if any) on the follow...

Q: On January 1, 2017, Salem Corp. issued $1

On January 1, 2017, Salem Corp. issued $1.1 million of five-year, zero-interest-bearing notes along with warrants to buy 1 million common shares at $22 per share. On January 1, 2017, Salem had 9.3 mil...

Q: Parker Corporation’s charter authorizes the issuance of 1 million common shares and

Parker Corporation’s charter authorizes the issuance of 1 million common shares and 500,000 preferred shares that have a dividend rate of $6 per share per year. The following transactions involving sh...

Q: Treeton Inc. had net income for the fiscal year ended June

Treeton Inc. had net income for the fiscal year ended June 30, 2017 of $5 million. There were 500,000 common shares outstanding throughout 2017. The average market price of the common shares for the e...

Q: As auditor for Checkem & Associates, you have been assigned to

As auditor for Checkem & Associates, you have been assigned to review Tao Corporation’s calculation of earnings per share for the current year. The controller, Mac Taylor, has su...

Q: The following information is for Polo Limited for 2017:

The following information is for Polo Limited for 2017: There were no changes during 2017 in the number of common shares, preferred shares, or convertible bonds outstanding. For simplicity, ignore t...

Q: The following information is available for Dylan Inc., a company whose

The following information is available for Dylan Inc., a company whose shares are traded on the Toronto Stock Exchange: Other information: 1. For all of the fiscal year 2017, $100,000 of 6% cumulati...

Q: Gateway Corporation has outstanding 200,000 common shares that were issued

Gateway Corporation has outstanding 200,000 common shares that were issued at $10 per share. The balances at January 1, 2017 were $21 million in its Retained Earnings account; $4.3 million in its Cont...

Q: Audrey Inc. has 1 million common shares outstanding as at January

Audrey Inc. has 1 million common shares outstanding as at January 1, 2017. On June 30, 2017, 4% convertible bonds were converted into 100,000 additional shares. Up to that point, the bonds had paid in...

Q: Use the same information for Audrey Inc. as in P17-

Use the same information for Audrey Inc. as in P17-3, but also assume the following. 1. On September 30, 200,000 convertible preferred shares were redeemed. If they had been converted, these shares wo...

Q: Gao Limited, a publicly traded company, uses IFRS and had

Gao Limited, a publicly traded company, uses IFRS and had the following events and transactions occur in its fiscal year ending October 31, 2017. Although no dates are given, the events described are...

Q: An excerpt from the statement of financial position of Twilight Limited follows

An excerpt from the statement of financial position of Twilight Limited follows: 1. Options were granted/written in 2016 that give the holder the right to purchase 100,000 common shares at $8 per sh...

Q: Neilson Corp. reported $245,000 of net income for

Neilson Corp. reported $245,000 of net income for 2017. In preparing the statement of cash flows, the accountant noted several items that might affect cash flows from operating activities. 1. During 2...

Q: After Enron, WorldCom, and other major corporate scandals that rocked

After Enron, WorldCom, and other major corporate scandals that rocked America in the recent past, it seemed that nothing would surprise investors or regulators. However, almost everyone was shocked by...

Q: Tool Co. is a medium-sized company that buys copper

Tool Co. is a medium-sized company that buys copper rod and plastic materials to produce insulated copper wiring. Tool Co. operates out of a single building of about 500,000 square feet that includes...

Q: Video Technology Plc was established in 1987 to assemble video cassette recorders

Video Technology Plc was established in 1987 to assemble video cassette recorders (VCRs). There is now increased competition in its markets and the company expects to find it difficult to make an acce...

Q: Sniwe plc intend to launch a commemorative product on 1 August 2017

Sniwe plc intend to launch a commemorative product on 1 August 2017 for a sports event commencing in 2019. The product will have variable costs of £16 per unit. Production capacity available for the p...

Q: Teva Pharmaceutical Industries Ltd reorganized its pharmaceutical operations into decentralized cost and

Teva Pharmaceutical Industries Ltd reorganized its pharmaceutical operations into decentralized cost and profit centres. Teva proposed a transfer pricing system based on marginal costs. But the propos...

Q: Professor Anthony Atkinson, (University of Waterloo) and adapted by

Professor Anthony Atkinson, (University of Waterloo) and adapted by Professor John Shank (The Amos Tuck School of Business Administration Dartmouth College) This case is reprinted from Cases in Cost M...

Q: The market price for Microsoft Corporation closed at $26.71

The market price for Microsoft Corporation closed at $26.71 and $25.96 on December 31, current year, and previous year, respectively. The dividends per share were $0.80 for current year and $0.64 for...

Q: Select a public corporation you are familiar with or which interests you

Select a public corporation you are familiar with or which interests you. Using the Internet, develop a short (1 to 2 pages) profile of the corporation. Include in your profile the following informati...

Q: The now defunct Enron Corporation, once headquartered in Houston, Texas

The now defunct Enron Corporation, once headquartered in Houston, Texas, provided products and services for natural gas, electricity, and communications to wholesale and retail customers. Enronâ...

Q: The following stock exchange data for Microsoft Corporation were taken from the

The following stock exchange data for Microsoft Corporation were taken from the Yahoo! Finance Web site on November 29, 2013: a. If you owned 500 shares of Mircosoft, what amount would you receive a...

Q: On July 11, American Lift Corporation, a wholesaler of hydraulic

On July 11, American Lift Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 5,000 shares of $5 par common stock with a current market price of $32. Journalize the entry to re...

Q: Olde Wine Corporation has 250,000 shares of $40 par

Olde Wine Corporation has 250,000 shares of $40 par common stock outstanding. On February 15, Olde Wine Corporation declared a 2% stock dividend to be issued May 2 to stockholders of record on March 2...

Q: On June 30, 2016, Setzer Corporation had a market price

On June 30, 2016, Setzer Corporation had a market price of $100 per share of common stock. For the previous year, Setzer paid an annual dividend of $4.00. Compute the dividend yield for Setzer Corpora...

Q: On October 23, 2016, Wilkerson Company had a market price

On October 23, 2016, Wilkerson Company had a market price of $40 per share of common stock. For the previous year, Wilkerson paid an annual dividend of $1.20. Compute the dividend yield for Wilkerson...

Q: The following audit procedures are concerned with tests of details of general

The following audit procedures are concerned with tests of details of general cash and financial instruments balances: 1. Obtain a standard bank confirmation from each bank with which the client does...

Q: If a three-year bond with a $1,000

If a three-year bond with a $1,000 face value has a coupon rate of 3.5%, and the current market interest rate is 2%, what is the market price of the bond?

Q: If the market price for bonds is higher than the equilibrium price

If the market price for bonds is higher than the equilibrium price, what is the result, and what will change to bring about equilibrium as price falls, ceteris paribus?

Q: Rambotix Company has two divisions, the Semiconductor Division and the X

Rambotix Company has two divisions, the Semiconductor Division and the X-ray Division. The X-ray Division may purchase semiconductors from the Semiconductor Division or from outside suppliers. The Sem...

Q: The financial statements for Nike, Inc., are presented in Appendix

The financial statements for Nike, Inc., are presented in Appendix B at the end of the text. The following additional information (in thousands) is available: Instructions 1. Determine the followin...

Q: A farmer has 100 lb of apples and 50 lb of potatoes

A farmer has 100 lb of apples and 50 lb of potatoes for sale. The market price for apples (per pound) each day is a random variable with a mean of 0.5 dollar and a standard deviation of 0.2 dollar. Si...

Q: On January 1, 2017, Ven Corporation had the following stockholders’

On January 1, 2017, Ven Corporation had the following stockholders’ equity accounts. During the year, the following transactions occurred. (Enter account name only and do not provi...

Q: Again, referring to Willerton of the two previous problems, assume

Again, referring to Willerton of the two previous problems, assume the firm’s cost of retained earnings is 11% and its marginal tax rate is 40%, calculate its WACC using its book val...

Q: The market price of Albertson Ltd.’s common stock is $

The market price of Albertson Ltd.’s common stock is $5.50, and 100,000 shares are outstanding. The firm's books show common equity accounts totaling $400,000. There are 5,000 preferred shares outst...

Q: The Connecticut Computer Company has the following selected financial results.

The Connecticut Computer Company has the following selected financial results. The company is considering a capital restructuring to increase leverage from its present level of 10% of capital. a....

Q: Referring to Willerton Industries of the previous problem, the company’s long

Referring to Willerton Industries of the previous problem, the company’s long-term debt is comprised of 20-year $1,000 face value bonds issued seven years ago at an 8% coupon rate. The bonds are now...

Q: You're a financial analyst at Pinkerton Interactive Graphic Systems (PIGS),

You're a financial analyst at Pinkerton Interactive Graphic Systems (PIGS), a successful entrant in a new and rapidly growing field. As in most new fields, however, rapid growth is anything but assur...

Q: The Argo Pamphlet Company’s dividend payout ratio is 35%. It is

The Argo Pamphlet Company’s dividend payout ratio is 35%. It is currently paying an annual dividend of $1.30. a. What is Argo’s EPS? b. What is the market price of Argo’s stock if its P/E ratio is 14...

Q: You own 1,000 shares of Jennings Corp. stock,

You own 1,000 shares of Jennings Corp. stock, which is currently selling for $88.00. Calculate the number of shares you would own and the stock’s market price after each of the following stock splits...

Q: Integrity Group, an association of venture capitalists, is considering using

Integrity Group, an association of venture capitalists, is considering using a leveraged buyout to purchase Schrag Co., a well-established hi-tech firm. Schrag has long-term debt with a book value of...

Q: The Wycombe Company is doing well and is interested in diversifying,

The Wycombe Company is doing well and is interested in diversifying, so it's been looking around for an acquisition target. The Albe Company has been found with the help of an investment banker. Alb...

Q: You're a seasoned financial executive who's recently been hired as the CFO

You're a seasoned financial executive who's recently been hired as the CFO of the Pilaster Corporation. The firm has just finished two years in which its financial performance has been clearly subpar....

Q: A business can be valued by capitalizing its earnings stream (see

A business can be valued by capitalizing its earnings stream (see example 6.15). How might you use the same idea to value securities, especially the stock of large publicly held companies? Is there a...

Q: In the last problem, assume that the cash flow from the

In the last problem, assume that the cash flow from the Downhill acquisition grows at 10% from its initial value for one year and then grows at 5% indefinitely (starting in the third year). Calculate...

Q: A bond that pays 10% interest compounded annually on a $

A bond that pays 10% interest compounded annually on a $1,000 face value will mature in 20 years. The interest rate is now 12%. What should the bond’s market price be?

Q: Calculate the market price of a $1,000 face value

Calculate the market price of a $1,000 face value bond under the following conditions.

Q: The Rapscallion Company’s stock is selling for $43.75.

The Rapscallion Company’s stock is selling for $43.75. Dave Jones has done some research on the firm and its industry, and thinks it will pay dividends of $5 next year and $7 the following year. Aft...

Q: Gao Limited, a publicly traded company, uses IFRS and had

Gao Limited, a publicly traded company, uses IFRS and had the following events and transactions occur in its fiscal year ended October 31, 2020. Although no dates are given, the events described are i...

Q: Neilson Corp. reported $245,000 of net income for

Neilson Corp. reported $245,000 of net income for 2020. In preparing the statement of cash flows, the accountant noted several items that might affect cash flows from operating activities. 1. During...

Q: Refer to the financial statements and accompanying notes of Canadian Tire Corporation

Refer to the financial statements and accompanying notes of Canadian Tire Corporation Limited, for its year ended December 31, 2017. The financial statements are available on SEDAR (www.sedar.com)....

Q: Khalid Inc. has the following selected financial data: /

Khalid Inc. has the following selected financial data: There were no preferred dividends in arrears. a. Calculate the following ratios for 2020: 1. rate of return on common shareholders' equity, 2...

Q: Bedard Corporation reported net income of $300,000 in 2020

Bedard Corporation reported net income of $300,000 in 2020 and had 200,000 common shares outstanding throughout the year. Also outstanding all year were 45,000 (written) options to purchase common sha...

Q: On January 1, 2020, Blaine Corporation granted 6,000

On January 1, 2020, Blaine Corporation granted 6,000 options to executives. Each option entitles the holder to purchase one share of Blaine's common shares at $35 per share at any time after January 1...

Q: The following information (in $000) has been obtained from

The following information (in $000) has been obtained from Patinka Limited's financial statements for the fiscal years ended December 31. There were no preferred shares issued by Patinka nor were the...

Q: Dadayeva Inc. has $5 million of 6% convertible bonds

Dadayeva Inc. has $5 million of 6% convertible bonds outstanding. Each $1,000 bond is convertible into 50 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020...

Q: Somerton Corporation had two issues of securities outstanding: common shares and

Somerton Corporation had two issues of securities outstanding: common shares and a 6% convertible bond issue in the face amount of $6 million. Interest payment dates of the bond issue are June 30 and...

Q: On January 2, 2020, Jackson Corporation purchased a call option

On January 2, 2020, Jackson Corporation purchased a call option for $500 on Walter's common shares. The call option gives Jackson the option to buy 1,000 shares of Walter at a strike price of $30 per...

Q: On April 1, 2020, Petey Ltd. paid $175

On April 1, 2020, Petey Ltd. paid $175 for a call to buy 700 shares of NorthernTel at a strike price of $27 per share any time during the next six months. The market price of NorthernTel's shares was...

Q: On January 1, 2020, Fresh Juice Ltd. entered into

On January 1, 2020, Fresh Juice Ltd. entered into a purchase commitment contract to buy 10,000 oranges from a local company at a price of $0.50 per orange any time during the next year. The contract p...

Q: Laurentian Mills Ltd. had the following shareholders' equity at January 1

Laurentian Mills Ltd. had the following shareholders' equity at January 1, 2020. The contributed surplus accounts arose from amounts received in excess of the par value of the shares when issued. Dur...

Q: Standard Corp's net income for 2020 is $150,000.

Standard Corp's net income for 2020 is $150,000. The only potentially dilutive securities outstanding were 1,000 call options issued during 2019, with each option being exercisable for one share at $2...

Q: On January 1, 2020, Waldorf Corporation granted 40,000

On January 1, 2020, Waldorf Corporation granted 40,000 options to key executives. Each option allows the executive to purchase one share of Waldorf's common shares at a price of $30 per share. The opt...

Q: Vanstone Corp., a public company, adopted a stock option plan

Vanstone Corp., a public company, adopted a stock option plan on November 30, 2020, that designated 70,000 common shares as available for the granting of options to officers of the corporation at an e...

Q: LEW Jewellery Corp. uses gold in the manufacture of its products

LEW Jewellery Corp. uses gold in the manufacture of its products. LEW anticipates that it will need to purchase 500 ounces of gold in October 2020 for jewellery that will be shipped for the holiday sh...

Q: Esau Inc. presented the following data: /

Esau Inc. presented the following data: As at January 1, 2020, there were no dividends in arrears. On December 31, 2020, Esau declared and paid the preferred dividend for 2020. Instructions a. Cal...

Q: The unclassified SFP accounts for Sorkin Corporation, which is a public

The unclassified SFP accounts for Sorkin Corporation, which is a public company using IFRS, for the year ended December 31, 2019, and its statement of comprehensive income and statement of cash flows...

Q: Refer to P16.1, but assume that Hing Wa wrote

Refer to P16.1, but assume that Hing Wa wrote (sold) the call option for a premium of $480 (instead of buying it). Assume that the market price of the shares and the fair value of the option are other...

Q: Brondon Corp. purchased a put option on Mykia common shares on

Brondon Corp. purchased a put option on Mykia common shares on July 7, 2020, for $480. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2021. The follow...

Q: On January 1, 2020, Salem Corp. issued $1

On January 1, 2020, Salem Corp. issued $1.1 million of five-year, zero-interest-bearing notes along with warrants to buy 1 million common shares at $22 per share. On January 1, 2020, Salem had 9.3 mil...

Q: Treeton Inc. had net income for the fiscal year ended June

Treeton Inc. had net income for the fiscal year ended June 30, 2020, of $5 million. There were 500,000 common shares outstanding throughout 2020. The average market price of the common shares for the...

Q: The following information is for Polo Limited for 2020: /

The following information is for Polo Limited for 2020: There were no changes during 2020 in the number of common shares, preferred shares, or convertible bonds outstanding. For simplicity, ignore th...

Q: The following information is available for Dylan Inc., a company whose

The following information is available for Dylan Inc., a company whose shares are traded on the Toronto Stock Exchange: Other information: 1. For all of the fiscal year 2020, $100,000 of 6% cumulat...

Q: Gateway Corporation has outstanding 200,000 common shares that were issued

Gateway Corporation has outstanding 200,000 common shares that were issued at $10 per share. The balances at January 1, 2020, were $21 million in its Retained Earnings account; $4.3 million in its Con...

Q: Audrey Inc. has 1 million common shares outstanding as at January

Audrey Inc. has 1 million common shares outstanding as at January 1, 2020. On June 30, 2020, 4% convertible bonds were converted into 100,000 additional shares. Up to that point, the bonds had paid in...

Q: Use the same information for Audrey Inc. as in P17.

Use the same information for Audrey Inc. as in P17.3, but also assume the following. 1. On September 30, 200,000 convertible preferred shares were redeemed. If they had been converted, these shares w...

Q: An excerpt from the statement of financial position of Twilight Limited follows

An excerpt from the statement of financial position of Twilight Limited follows: Notes and Assumptions December 31, 2020 1. Options were granted/written in 2019 that give the holder the right to pu...

Q: The treasurer of Hing Wa Corp. has read on the Internet

The treasurer of Hing Wa Corp. has read on the Internet that the stock price of Ewing Inc. is about to take off. In order to profit from this potential development, Hing Wa purchased a call option on...

Q: Consider a certain commodity that is produced by many companies and purchased

Consider a certain commodity that is produced by many companies and purchased by many other firms. Over a relatively short period, there tends to be an equilibrium price p0 per unit of the commodity t...

Q: Fowler Electronics produces colour plasma screens in its Bien Hoa plant in

Fowler Electronics produces colour plasma screens in its Bien Hoa plant in Vietnam. The screens are then shipped to the entity’s plant in Sturt, South Australia, where they are incorporated into finis...

Q: Georgina Chan is the chief financial officer of Colorado Pty Ltd,

Georgina Chan is the chief financial officer of Colorado Pty Ltd, which has three interdependent divisions where, on average, about 30 per cent of the output of one division is transferred to one of t...

Q: Rosedale Ltd is a listed company with 30 million shares issued.

Rosedale Ltd is a listed company with 30 million shares issued. It wants to raise more capital by means of a rights issue. The current market price is $6 and the subscription price is $5. The rights w...

Q: The graph of a regression equation with one independent variable, y

The graph of a regression equation with one independent variable, y = b0 + b1 x, yields a straight line in a two-dimensional (x, y) space. To graph a regression equation with two independent variables...

Q: In 2018, common stockholders received $6 per share in annual

In 2018, common stockholders received $6 per share in annual dividends. The market price per share for common stock was $24. Compute the dividend yield for common stock.

Q: Using the information from S12-8, a market price of

Using the information from S12-8, a market price of $34 per share, and 50,000 and 60,000 shares of common stock outstanding in 2017 and 2018, respectively, compute the following for 2018. Round answer...

Q: The stockholders’ equity for Lakeside Marina, Inc., on December 31

The stockholders’ equity for Lakeside Marina, Inc., on December 31, 2017, follows: On January 31, 2018, the market price of Lakeside Marina’s common stock was $20...

Q: Century Communications, Inc., began 2018 with 290,000 shares

Century Communications, Inc., began 2018 with 290,000 shares of $1 par common stock issued and outstanding. Beginning Paid-in Capital in Excess of Par—Common was $580,000, and retained earnings was $7...

Q: The stockholders’ equity for Coeur d’Alene Marina, Inc., on December

The stockholders’ equity for Coeur d’Alene Marina, Inc., on December 31, 2017, follows: On May 31, 2018, the market price of Coeur d’Alene Marin...

Q: Universal Communications, Inc., began 2018 with 340,000 shares

Universal Communications, Inc., began 2018 with 340,000 shares of $1 par common stock issued and outstanding. Beginning Paid-in Capital in Excess of Par—Common was $590,000, and Retained Earnings was...

Q: This case focuses on the financial statement analysis of Columbia Sportswear.

This case focuses on the financial statement analysis of Columbia Sportswear. Recall from this chapter that stakeholders use numerous ways to analyze and so better understand the financial position an...

Q: Comparative financial statement data of Shabby Chic Furniture Company follow:

Comparative financial statement data of Shabby Chic Furniture Company follow: Other information follows: 1. Market price of a share of common stock was $31.00 at December 31, 2018, and $48.50 at De...

Q: Assume you are purchasing an investment and decide to invest in a

Assume you are purchasing an investment and decide to invest in a company in the home remodeling business. You narrow the choice to Skyview, Inc., or Vista Corp. You assemble the following data. Assum...

Q: Comparative financial statement data of Lodgepole Furniture Company follow:

Comparative financial statement data of Lodgepole Furniture Company follow: Other information follows: a. Market price of a share of common stock was $50.00 at December 31, 2018, and $33.00 at Dece...

Q: Assume you are purchasing an investment and decide to invest in a

Assume you are purchasing an investment and decide to invest in a company in the home remodeling business. You narrow the choice to Hudson, Inc., or Madison Corp. You assemble the following data: Sele...

Q: At the beginning of the year, Ms. Alston owned 2

At the beginning of the year, Ms. Alston owned 2,900 shares of SBS stock with a basis of $32 per share. SBS paid a 50 percent stock dividend, and Ms. Alston received 1,450 additional SBS shares. Befor...

Q: Mrs. Y owns 1,800 shares of Acme common stock

Mrs. Y owns 1,800 shares of Acme common stock, which she purchased for $10 per share in 2002. In October of this year, she decides to sell her Acme stock for the market price of $27 per share, the hig...

Q: Ernlo is an accrual basis corporation with a June 30 fiscal year

Ernlo is an accrual basis corporation with a June 30 fiscal year-end. On June 2, 2019, Ernlo entered into a binding contract to purchase a sixmonth supply of heating oil from a local distributor at th...

Q: For the following problem, assume the taxable year is 2019.

For the following problem, assume the taxable year is 2019. In 2012 (year 0), Mrs. Linsey exercised a stock option by paying $100 per share for 225 shares of ABC stock. The market price at date of exe...

Q: Some recent financial statements for Smolira Golf Corp. follow. Use

Some recent financial statements for Smolira Golf Corp. follow. Use this information to work. Smolira Golf Corp. has 15,000 shares of common stock outstanding, and the market price for a share of s...

Q: The market price for a product has been $50 per unit

The market price for a product has been $50 per unit, but competitive pressures have reduced the market price to $45. The firm manufactures 10,000 of these products per year at a manufacturing cost of...

Q: Below is information regarding the capital structure of Micro Advantage Inc.

Below is information regarding the capital structure of Micro Advantage Inc. On the basis of this information, you are asked to respond to the following three questions: Required: 1. Micro Advantage...

Q: American Motors Inc. is divided, for performance evaluation purposes,

American Motors Inc. is divided, for performance evaluation purposes, into several divisions. The Automobile Division of American Motors purchases most of its transmission systems from another unit of...

Q: Ajax Consolidated has several divisions; however, only two of its

Ajax Consolidated has several divisions; however, only two of its divisions transfer products to other divisions. The mining division refines toldine, which it transfers to the metals division, where...

Q: Provo Consolidated Resources Company (PCRC) has several divisions. However

Provo Consolidated Resources Company (PCRC) has several divisions. However, only two divisions transfer products to other divisions. The Mining Division refines toldine, which is then transferred to t...

Q: For many years, Leno Corporation has used a straightforward cost-

For many years, Leno Corporation has used a straightforward cost-plus pricing system, marking its goods up approximately 25 percent of total cost. The company has been profitable; however, it has rece...

Q: You just started a summer internship with the successful management consulting firm

You just started a summer internship with the successful management consulting firm of Kirk, Spock, and McCoy. Your first day on the job was a busy one, as the following problems were presented to you...

Q: Alpha Communications, Inc., which produces telecommunications equipment in the United

Alpha Communications, Inc., which produces telecommunications equipment in the United States, has a very strong local market for its circuit board. The variable production cost is $130, and the compan...

Q: Alpine Energy Corporation has 1,200,000 shares of $

Alpine Energy Corporation has 1,200,000 shares of $10 par common stock outstanding. On August 2, Alpine Energy declared a 6% stock dividend to be issued October 8 to stockholders of record on Septembe...

Q: Willey’s Grill & Restaurant Corporation wholesales ovens and ranges to restaurants throughout

Willey’s Grill & Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Willey’s Grill & Restaurant, which had 345,000 shares of common stock outstanding, declared...

Q: Amazon.com, Inc. (AMZN) is one of

Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Walmart Inc. (WMT) is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however,...

Q: Pecan Theatre Inc. owns and operates movie theaters throughout Florida and

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: 20Y1, $60,000; 20Y2, $80,000; 20Y3...

Q: Obtain Alphabet Inc.’s (GOOG) most recent annual report

Obtain Alphabet Inc.’s (GOOG) 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...

Q: Prepare Tiker Company’s journal entries to record the following transactions and the

Prepare Tiker Company’s journal entries to record the following transactions and the adjusting entry to record the fair value of the stock investments portfolio. This is the first and only time the co...

Q: Franklin Co. reported the following year-end data: net

Franklin Co. reported the following year-end data: net income of $220,000; annual cash dividends per share of $3; market price per (common) share of $150; and earnings per share of $10. Compute the a....

Q: Each team is to select a different industry, and each team

Each team is to select a different industry, and each team member is to select a different company in that industry and acquire its financial statements. Use those statements to analyze the company, i...

Q: Indicate whether each of the following statements regarding dividends is true or

Indicate whether each of the following statements regarding dividends is true or false. 1. Cash and stock dividends reduce retained earnings. 2. Dividends payable is recorded at the time a cash divide...

Q: Teams are to select an industry, and each team member is

Teams are to select an industry, and each team member is to select a different company in that industry. Each team member then is to acquire the selected company’s financial statements (or Form 10-K)...

Q: Best Corp., a public company using IFRS, signed a long

Best Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $1 million. At December 31, 2019, t...

Q: The following account balances were included in the trial balance of Reid

The following account balances were included in the trial balance of Reid Corporation at June 30, 2020: During 2020, Reid incurred production salary and wage costs of $710,000, consumed raw materials...

Q: Use the information in BE4.12 to prepare a multiple-

Use the information in BE4.12 to prepare a multiple-step income statement for Sierra Corporation, showing expenses by function. (b) Assume the average market price for the common shares is $66. What i...

Q: The financial records of Geneva Inc. were destroyed by fire at

The financial records of Geneva Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept the following statistical data related to the income statement: 1. The beginning in...

Q: At December 31, 2020, Igor Ltd. has outstanding non

At December 31, 2020, Igor Ltd. has outstanding non cancellable purchase commitments for 32,500 liters of raw material at $2.00 per liter. The material will be used in Igor's manufacturing process, an...

Q: The following are two independent situations. Situation 1: Lauren

The following are two independent situations. Situation 1: Lauren Inc. received dividends from its common share investments during the year ended December 31, 2020, as follows: • A cash dividend of $1...

Q: Grappa Grapes Inc. (GGI) grows grapes and produces sparkling

Grappa Grapes Inc. (GGI) grows grapes and produces sparkling wines. The company is located in a very old area of town with easy access to fertile farmland that is excellent for growing grapes. It is o...

Q: Desrosiers Ltd. had the following long-term receivable account balances

Desrosiers Ltd. had the following long-term receivable account balances at December 31, 2019: Transactions during 2020 and other information relating to Desrosiers' long-term receivables were as fol...

Q: Brooks Corp. is a medium-sized corporation that specializes in

Brooks Corp. is a medium-sized corporation that specializes in quarrying stone for building construction. The company has long dominated the market, and at one time had 70% market penetration. During...

Q: You are bearish on Telecom and decide to sell short 100 shares

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker’s...

Q: You are bullish on Telecom stock. The current market price is

You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per y...

Q: The market price of a security is $50. Its expected

The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6%, and the market risk premium is 8.5%. What will be the market price of the security if its correlati...

Q: Jack Straw, a director in ABC Ltd, has suggested that

Jack Straw, a director in ABC Ltd, has suggested that the accounting treatment for two items be changed in the next set of financial statements. These are summarized as follows: 1. The first is goodwi...

Q: The risk-free rate of return is 8%, the expected

The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings i...

Q: The Generic Genetic (GG) Corporation pays no cash dividends currently

The Generic Genetic (GG) Corporation pays no cash dividends currently and is not expected to for the next four years. Its latest EPS was $5, all of which was reinvested in the company. The firm’s expe...

Q: The stock of Nogro Corporation is currently selling for $10 per

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year...

Q: The Digital Electronic Quotation System (DEQS) Corporation pays no cash

The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $10, all of which was reinvested in the c...

Q: The Duo Growth Company just paid a dividend of $1 per

The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next three years and then to level off to 5% per year forever. You think...

Q: Chiptech, Inc., is an established computer chip firm with several

Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 a share last year, and just...

Q: Netflux is selling for $100 a share. A Netflux call

Netflux is selling for $100 a share. A Netflux call option with one month until expiration and an exercise price of $105 sells for $2 while a put with the same strike and expiration sells for $6.94. W...

Q: On June 30, Rae Corporation had a market price of $

On June 30, Rae Corporation had a market price of $100 per share of common stock. For the previous year, Rae paid an annual dividend of $8.00 per share. Compute the dividend yield for Rae Corporation....

Q: On October 23, Brynner Company had a market price of $

On October 23, Brynner Company had a market price of $60 per share of common stock. For the previous year, Brynner paid an annual dividend of $0.90 per share. Compute the dividend yield for Brynner Co...

Q: Vanessa Kaiser and Mariah Newman decide to form a partnership by combining

Vanessa Kaiser and Mariah Newman decide to form a partnership by combining the assets of their separate businesses. Kaiser contributes the following assets to the partnership: cash, $25,800; accounts...

Q: Advanced Life Co. is an HMO for businesses in the Albuquerque

Advanced Life Co. is an HMO for businesses in the Albuquerque area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (600,000 shares authorized; 400,000 sh...

Q: Yeoman Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the

Yeoman Grill Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Southwest. Yeoman Grill Restaurant Corporation, which had 35,000 shares of common stock outstanding, decla...

Q: The market price for Microsoft Corporation closed at $101.57

The market price for Microsoft Corporation closed at $101.57 and $85.95 on December 31, current year, and previous year, respectively. The dividends per share were $1.68 for current year and $1.56 for...

Q: The following information was taken from the financial statements of Zeil Inc

The following information was taken from the financial statements of Zeil Inc. for December 31 of the current fiscal year: Common stock, $20 par (no change during the year) …………….. $8,000,000 Preferre...

Q: Black Bear Bike Corp. manufactures mountain bikes and distributes them through

Black Bear Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Black Bear Bike Corp. has declared the following annual dividends o...

Q: The financial statements for Nike, Inc., are presented in Appendix

The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. Use the following additional information (in millions): Accounts receivable at May 31, 2018 …………………… $ 3,49...

Q: Top-Value Corporation has 900,000 shares of $26

Top-Value Corporation has 900,000 shares of $26 par common stock outstanding. On September 2, Top-Value Corporation declared a 3% stock dividend to be issued November 30 to stockholders of record on O...

Q: Red Market Corporation has 370,000 shares of $27 par

Red Market Corporation has 370,000 shares of $27 par common stock outstanding. On June 8, Red Market Corporation declared a 5% stock dividend to be issued August 12 to stockholders of record on July 1...

Q: Show how your answers for Problem 3 would change if the new

Show how your answers for Problem 3 would change if the new offering price was $0.80 for 1,500 shares. Assume other things remain the same. Data from Problem 3: Calculate the conversion price formula...

Q: By July 1, 20X2, the market yield on the Akers

By July 1, 20X2, the market yield on the Akers Company bonds described in E12-1 had risento 10%. Required: What was the bonds’ market price on July 1, 20X2?

Q: Kadri Corporation (a fictional company) reported basic EPS of $

Kadri Corporation (a fictional company) reported basic EPS of $3.00 and diluted EPS of $2.40 for 20X1. Its EPS calculations follow: Kadri issued the convertible preferred stock at the beginning of 20X...

Q: Trask Corporation (a fictional company) had the following shareholders’ equity

Trask Corporation (a fictional company) had the following shareholders’ equity account balances at December 31, 20X0: Transactions during 20X1 and other information relating to the s...

Q: In its December 31, 20X0, balance sheet, Castle,

In its December 31, 20X0, balance sheet, Castle, Inc. (a fictional company), reported 400,000 issued shares of common stock and 50,000 shares of treasury stock. The 20X0 annual report also reported 10...

Q: Riggs Corporation (a fictional company) has the following balance sheet

Riggs Corporation (a fictional company) has the following balance sheet information at December 31, 20X2. The convertible bonds were issued at par in 20X0 and are convertible into Riggsâ€&#...

Q: On January 1, 20X1, Darth Corp. (a fictional

On January 1, 20X1, Darth Corp. (a fictional company) granted nonqualified stock options to certain key employees as additional compensation. The options were for 100,000 shares of Darth’s $1 par valu...

Q: The stockholders’ equity section of Warm Ways Inc.’s balance sheet

The stockholders’ equity section of Warm Ways Inc.’s balance sheet at January 1, 20X1, shows: Warm Ways (a fictional company) reported net income of $9,250,000 for...

Q: It’s July 1, 20X2, and the market price of Warm

It’s July 1, 20X2, and the market price of Warm Ways’s common stock (Problem P16-3) is $175 per share. There are 1.1 million common shares outstanding, and the Retained earnings account shows a balanc...

Q: The Shareholders’ Equity section in the balance sheet of Holiday Roads Company

The Shareholders’ Equity section in the balance sheet of Holiday Roads Company (a fictional company) appears as follows: Net income for 20X1 was $1,700,000, preferred stock dividends...

Q: Clovis Company recently issued $500,000 (face value)

Clovis Company recently issued $500,000 (face value) bonds to finance a new constructionproject. The company’s chief accountant prepared the following bond amortization schedule: Req...

Q: On July 1, 20X1, Stan Getz, Inc., bought

On July 1, 20X1, Stan Getz, Inc., bought call option contracts for 500 shares of Selmer Manufacturing common stock. The contracts cost $200, expire on September 15, and have anexercise price of $40 pe...

Q: Silverado Inc. buys titanium from a supplier that requires a six

Silverado Inc. buys titanium from a supplier that requires a six-month firm commitment on allpurchases. On January 1, 20X1, Silverado signs a contract with the supplier to purchase 10,000 pounds of ti...

Q: Match each ratio or percentage with its formula by entering the appropriate

Match each ratio or percentage with its formula by entering the appropriate letter for each numbered item. Ratios or Percentages: 1. Current ratio 2. Net profit margin 3. Inventory turnover ratio 4. G...

Q: Going Places, Inc., manufactures a variety of luggage for airline

Going Places, Inc., manufactures a variety of luggage for airline passengers. The company has several luggage production divisions, including the Suitable Cases Division, as well as a wholly owned sub...

Q: Toil & Oil processes crude oil to jointly produce gasoline, diesel

Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost o...

Q: William’s Ball & Jersey Shop is a small athletic products company currently

William’s Ball & Jersey Shop is a small athletic products company currently trying to determine cost allocations. Accurate costing numbers are important but not crucial; no emplo...

Q: Maple Aircraft has issued a 4¾% convertible subordinated debenture due 2023

Maple Aircraft has issued a 4¾% convertible subordinated debenture due 2023. The conversion price is $47.00 and the debenture is callable at 102.75% of face value. The market price of the convertible...

Q: Project analysis New Energy is evaluating a new bio fuel facility.

Project analysis New Energy is evaluating a new bio fuel facility. The plant would cost $4,000 million to build and has the potential to produce up to 40 million barrels of synthetic oil a year. The p...

Q: In November 2021, the Brunswick Company signed two purchase commitments.

In November 2021, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2021. The second...

Q: The plant asset and accumulated depreciation accounts of Pell Corporation had the

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2020: Transactions during 2021 were as follows: a. On January 2, 2021, equipment we...

Q: For each asset classification, prepare a schedule showing depreciation for the

For each asset classification, prepare a schedule showing depreciation for the year ended December 31, 2021, using the following depreciation methods and useful lives: Land improvementsâ€&#...

Q: Amalgamated General Corporation is a consulting firm that also offers financial services

Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected tr...

Q: The long-term liability section of Eastern Post Corporation’s balance sheet

The long-term liability section of Eastern Post Corporation’s balance sheet as of December 31, 2020, included 10% bonds having a face amount of $40 million and a remaining premium of $6 million. On Ja...

Q: Bradley-Link’s December 31, 2021, balance sheet included the

Bradley-Link’s December 31, 2021, balance sheet included the following items: Long-Term Liabilities ($ in millions) 9.6% convertible bonds, callable at 101 beginning in 2022, due 2025 (net of unamorti...

Q: On October 15, 2020, the board of directors of Ensor

On October 15, 2020, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2021, 20 million stock options were granted, exercisable for 2...

Q: On December 31, 2020, Dow Steel Corporation had 600,

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common st...

Q: On December 31, 2020, Dow Steel Corporation had 600,

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common st...

Q: On January 1, 2021, Tonge Industries had outstanding 440,

On January 1, 2021, Tonge Industries had outstanding 440,000 common shares ($l par) that originally sold for $20 per share, and 4,000 shares of 10% cumulative preferred stock ($100 par), convertible i...

Q: At January 1, 2021, Canaday Corporation had outstanding the following

At January 1, 2021, Canaday Corporation had outstanding the following securities: 600 million common shares 20 million 6% cumulative preferred shares, $50 par 6.4% convertible bonds, $2,000 million fa...

Q: Assume the same facts as in BE 12–18, but

Assume the same facts as in BE 12–18, but that LED does not plan to sell the investment and does not think it is more likely than not that it will have to sell the investment before fair value recover...

Q: Walters Audio Visual, Inc., offers a stock option plan to

Walters Audio Visual, Inc., offers a stock option plan to its regional managers. On January 1, 2021, 40 million options were granted for 40 million $1 par common shares. The exercise price is the mark...

Q: JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are

JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options...

Q: Conrad Playground Supply underwent a restructuring in 2021. The company conducted

Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2021 before any...

Q: The comparative balance sheets for 2021 and 2020 and the income statement

The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company. Additional information from Arduous’s accounting records is pr...

Q: Refer to the data provided in the P 21–4 for

Refer to the data provided in the P 21–4 for Dux Company. Required: Prepare the statement of cash flows for Dux Company using the indirect method. Data from P 21-4: The comparative...

Q: Refer to the data provided in the P 21–11 for

Refer to the data provided in the P 21–11 for Arduous Company. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. Data from P 21-11: The co...

Q: Refer to the data provided in the P 21–4 for

Refer to the data provided in the P 21–4 for Dux Company. Required: Prepare the statement of cash flows for Dux Company. Use the T-account method to assist in your analysis. Data fr...

Q: Refer to the data provided in the P 21–11 for

Refer to the data provided in the P 21–11 for Arduous Company. Required: Prepare the statement of cash flows for Arduous Company. Use the T-account method to assist in your analysis....

Q: The comparative balance sheets for 2021 and 2020 and the statement of

The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provide...

Q: Niles Company granted 9 million of its no par common shares to

Niles Company granted 9 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share o...

Q: Under its executive stock option plan, National Corporation granted 12 million

Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2021, that permit executives to purchase 12 million of the company’s $1 par common shares within th...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. What is the effect on earnings in 2022? In 2023? Data from...

Q: On January 1, 2021, Hugh Morris Comedy Club (HMCC

On January 1, 2021, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that the options are exercised on April 3, 2024, when the market price is $19 per share. What journal entry will National record? Data from BE 19-...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that the options expire without being exercised. What journal entry will National record? Data from BE 19-3: Under its executive stock option plan...

Q: The Jaecke Group, Inc. manufactures various kinds of hydraulic pumps

The Jaecke Group, Inc. manufactures various kinds of hydraulic pumps. In June 2021, the company signed a fouryear purchase agreement with one of its main parts suppliers, Hydraulics, Inc. Over the fou...

Q: AGF Foods Company is a large, primarily domestic, consumer foods

AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy&acir...

Q: IGF Foods Company is a large, primarily domestic, consumer foods

IGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy&acir...

Q: You are assistant controller of Stamos & Company, a medium-

You are assistant controller of Stamos & Company, a medium-size manufacturer of machine parts. On October 22, 2020, the board of directors approved a stock option plan for key executives. On January 1...

Q: The shareholders’ equity of Proactive Solutions, Inc., included the following

The shareholders’ equity of Proactive Solutions, Inc., included the following at December 31, 2021: Common stock, $1 par Paid-in capital—excess of par on common stock 7% cumulative convertible preferr...

Q: The shareholders’ equity of Core Technologies Company on June 30, 2020

The shareholders’ equity of Core Technologies Company on June 30, 2020, included the following: Common stock, $1 par; authorized, 8 million shares; issued and outstanding, 3 million shares $ 3,000,000...

Q: Allied Paper Products, Inc., offers a restricted stock award plan

Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2021, the company granted 16 million of its $1 par common shares, subject to forfeiture if emplo...

Q: On December 31, 2020, Berclair Inc. had 200 million

On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purc...

Q: On December 31, 2020, Berclair Inc. had 200 million

On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purc...

Q: On December 31, 2020, Berclair Inc. had 200 million

On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purc...

Q: On January 1, 2021, Tru Fashions Corporation awarded restricted stock

On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminat...

Q: Stanley Department Stores reported net income of $720,000 for

Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2021. Additional Information: Common shares outstanding at Jan. 1, 2021 80,000 Incentive stock options (vested...

Q: As part of its executive compensation plan, Vertovec Inc. granted

As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s com...

Q: PHN Foods granted 18 million of its no-par common shares

PHN Foods granted 18 million of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on J...

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics (IE) granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2021. At exercise, holders of the SARs...

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2021. At exercise, holders of the SARs are...

Q: As part of its stock-based compensation package, on January

As part of its stock-based compensation package, on January 1, 2021, International Electronics granted restricted stock units (RSUs) representing 50 million $1 par common shares. At exercise, holders...

Q: Magnetic-Optical Corporation offers a variety of share-based compensation

Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit plan, the company on January 1, 2021, granted restricted stock units (RSUs...

Q: On January 1, 2021, David Mest Communications granted restricted stock

On January 1, 2021, David Mest Communications granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated...

Q: Heidi Software Corporation provides a variety of share-based compensation plans

Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2021, that permit exe...

Q: On January 1, 2021, Adams-Meneke Corporation granted 25

On January 1, 2021, Adams-Meneke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within...

Q: Walters Audio Visual Inc. offers an incentive stock option plan to

Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 40 million $1 par common shares. The exercise price is the market...

Q: SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options...

Q: On October 6, 2021, the Elgin Corporation signed a purchase

On October 6, 2021, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2022. The company’s fiscal year-end is December 31. The contract was exe...

Q: In March 2021, the Phillips Tool Company signed two purchase commitments

In March 2021, the Phillips Tool Company signed two purchase commitments. The first commitment requires Phillips to purchase inventory for $100,000 by June 15, 2021. The second commitment requires the...

Q: Rantzow-Lear Company buys and sells debt securities expecting to earn

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company’s fiscal year ends o...

Q: Amber Mining and Milling, Inc., contracted with Truax Corporation to

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by i...

Q: 1. Prepare the journal entry on January 1, 2021,

1. Prepare the journal entry on January 1, 2021, for Truax Corporation’s sale of the lathe. Assume Truax spent $400,000 to construct the lathe. 2. Prepare an amortization schedule for the three-year t...

Q: On January 1, 2021, Gless Textiles issued $12 million

On January 1, 2021, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gles...

Q: On August 1, 2021, Limbaugh Communications issued $30 million

On August 1, 2021, Limbaugh Communications issued $30 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 20 detachable stock warrants, eac...

Q: The ZZ Group has two divisions, X and Y. Each

The ZZ Group has two divisions, X and Y. Each division produces only one type of product: X produces a component, C and Y produces a finished product, FP. Each FP needs one C. It is the current policy...

Q: Introduction Jack Watson, an electrical engineer, established Electronic Boards plc

Introduction Jack Watson, an electrical engineer, established Electronic Boards plc as a ‘one-man’ company in the late 1970s. From small beginnings, the company ea...

Q: Tarheel Farm, Inc. (TFI) is a North Carolina

Tarheel Farm, Inc. (TFI) is a North Carolina corporation involved in agricultural production and has an October 31 fiscal year-end. It is not publicly traded, but it is required to prepare annual IFRS...

Q: Tarheel Farm, Inc. (TFI) is a North Carolina

Tarheel Farm, Inc. (TFI) is a North Carolina corporation involved in agricultural production and has an October 31 fiscal year-end. It is not publicly traded, but it is required to prepare annual fina...

Q: What was the change in Global Conglomerate’s book value of equity from

What was the change in Global Conglomerate’s book value of equity from 2017 to 2018 according to Table 2.1 ? Does this imply that the market price of Global’s share...

Q: In early 2015, Ford Motor (F) had a book

In early 2015, Ford Motor (F) had a book value of equity of $24.8 billion, 4.0 billion shares outstanding, and a market price of $16 per share. Ford also had cash of $21.7 billion, and total debt of $...

Q: Listed here are the stockholders’ equity sections of three public companies for

Listed here are the stockholders’ equity sections of three public companies for fiscal years ending in 2017 and 2016. Note that for General Mills these data are for the fiscal years...

Q: Listed here are data for five companies. These data are for

Listed here are data for five companies. These data are for the companies’ 2017 fiscal years. The market price per share is the closing price of the companies’ stoc...

Q: Using either Bed Bath & Beyond, Inc.’s most current

Using either Bed Bath & Beyond, Inc.’s most current Form 10-K or the company’s annual report, answer the following questions. To obtain the Form 10-K, use either the EDGAR system, following the instru...

Q: On 1 January 2017 Picus acquired 8 million $1 equity shares

On 1 January 2017 Picus acquired 8 million $1 equity shares in Sol for $20 million cash. The consideration paid was considerably lower than the market price because the vendor required a quick sale du...

Q: (a) The issued share capital of Manfred, a quoted

(a) The issued share capital of Manfred, a quoted company, on 1 November 2004 consisted of 36,000,000 ordinary shares of 75 cents each. On 1 May 2005 the company made a rights issue of 1 for 6 at $1.4...

Q: On 1 October 2005 Omega granted 50 employees options to purchase 500

On 1 October 2005 Omega granted 50 employees options to purchase 500 shares in the entity. The options vest on 1 October 2007 for those employees who remain employed by the entity until that date. The...

Q: Siry Company offers all its employees the opportunity to purchase its $

Siry Company offers all its employees the opportunity to purchase its $2 par value common stock at a 5% discount. The employees have 3 weeks to elect to participate in the plan. The current market pri...

Q: Using the information from BE19-13, now assume that Siry

Using the information from BE19-13, now assume that Siry Company offers the plan only to top executives. What journal entry will the company make on the date the employees purchase the shares? Data f...

Q: Tash Company offers select executives the opportunity to purchase its $1

Tash Company offers select executives the opportunity to purchase its $1 par value common stock at a 10% discount. The employees have 2 weeks to elect to participate in the plan. The current market pr...

Q: Vince Pickwick Company awarded 1,000 options to acquire 1,

Vince Pickwick Company awarded 1,000 options to acquire 1,000 shares of its common stock. The options have a fair value of $12 each. The market price and the exercise price were both equal to $6 per s...

Q: B-Boy Jeans, Inc. awarded 2,000 options

B-Boy Jeans, Inc. awarded 2,000 options to acquire 2,000 shares of its common stock. The options have a fair value of $30 each and cannot be exercised until employees complete a 3-year service period....

Q: The Goldwick Company awarded 1,000 options to acquire 1,

The Goldwick Company awarded 1,000 options to acquire 1,000 shares of its common stock, which can be sold back to the company. The options vest over 3 years. The market price and the exercise price we...

Q: Tommi-Boy Jeans, Inc. awarded 4,000 options

Tommi-Boy Jeans, Inc. awarded 4,000 options to acquire 4,000 shares of its preferred stock that can be sold back to the company. At the grant date, the options have a fair value of $12 each and cannot...

Q: Togo Incorporation started a share appreciation plan on January 1, 2018

Togo Incorporation started a share appreciation plan on January 1, 2018, when it granted 50,000 rights to its executives. The vesting period is 2 years. The stock appreciation rights are settled for c...

Q: Crowe Interior Designs of Santa Monica granted 300,000 qualified employee

Crowe Interior Designs of Santa Monica granted 300,000 qualified employee options on June 1 of the current year. The options allow employees to exchange each option for 36 shares of the company’s comm...

Q: Nickelfront Welders, Inc. granted 300,000 employee options on

Nickelfront Welders, Inc. granted 300,000 employee options on July 1 of the current year. Employees can exercise each option and receive two shares of the company’s common stock at an exercise price o...

Q: Marly, Inc., issues 1,000 of 6-year

Marly, Inc., issues 1,000 of 6-year, 3% convertible bonds at par of $1,000. Each $1,000 bond converts into 10 shares of no-par value common stock at the option of the bondholder beginning 3 years afte...

Q: Use the information from E14-16 and assume that all bonds

Use the information from E14-16 and assume that all bonds convert after 3 years. The carrying value of the bonds at the conversion date is $913,000. Prepare the journal entry at conversion Data from...

Q: Randolph Company issued 4,500 of its $1,000

Randolph Company issued 4,500 of its $1,000 par value bonds for $1,440, providing total cash proceeds of $6,480,000. There are no bond issue costs. The market price of Randolph’s common shares on the...

Q: DHC Associates issued 2,100 of its $1,000

DHC Associates issued 2,100 of its $1,000, 8%, 5-year par value bonds. There are no bond issue costs. Interest is paid annually. The market rate on the date of issue was 9%. The market price of DHC co...

Q: Pergolesi Products, Inc. recently issued 5,000 shares of

Pergolesi Products, Inc. recently issued 5,000 shares of no-par common stock. The shares carry a $2 per share stated value. The market price of the shares on the date of issue was $35 per share. The c...

Q: Max Ferguson Cosmetics compensates its key employees by offering stock options as

Max Ferguson Cosmetics compensates its key employees by offering stock options as part of total compensation. On January 1 of the current year, Max Ferguson granted 10,000 options to acquire 10,000 sh...

Q: Davidson Company compensates its key employees by offering stock options as part

Davidson Company compensates its key employees by offering stock options as part of total compensation. On January 1 of the current year, Davidson granted 80,000 options to acquire 80,000 shares of it...

Q: Max Ferguson Cosmetics compensates its key employees by offering stock options as

Max Ferguson Cosmetics compensates its key employees by offering stock options as part of total compensation. On January 1 of the current year, Max Ferguson granted 10,000 options to acquire 10,000 sh...

Q: eGear Company started a share appreciation plan on January 1, 2018

eGear Company started a share appreciation plan on January 1, 2018, when it granted 200,000 rights to its executives. The vesting period is 2 years. The plan expires on January 1, 2020. The fair value...

Q: NR Enterprises, Inc. granted stock appreciation rights to its key

NR Enterprises, Inc. granted stock appreciation rights to its key employees on January 2, 2018. These SARs allow the employees to receive cash at the end of the vesting period for the difference betwe...

Q: NR Enterprises, Inc., an IFRS reporter, granted stock appreciation

NR Enterprises, Inc., an IFRS reporter, granted stock appreciation rights to its key employees on January 2, 2018. These SARs allow the employees to receive cash at the end of the vesting period for t...

Q: NR Enterprises, Inc., an IFRS reporter, granted stock appreciation

NR Enterprises, Inc., an IFRS reporter, granted stock appreciation rights to its key employees on January 2, 2018. These SARs allow the employees to receive cash at the end of the vesting period for t...

Q: Archangelo Company provided the following information for the current year. Net

Archangelo Company provided the following information for the current year. Net income is $8,112,600, and the company is subject to a 40% tax rate. For the entire year, there are 1,020,300 shares of o...

Q: Backdoor Inc. had 200,000 shares of $5 par

Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 30,000 shares when the market price was $25. By how much did additional paid-in capital in...

Q: Backdoor Inc. had 200,000 shares of $5 par

Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 100,000 shares when the market price was $25. By how much did additional paid-in capital i...

Q: On January 1, 2018, Mesa Machinery Corporation issued 75 of

On January 1, 2018, Mesa Machinery Corporation issued 75 of 12-year, 12% convertible bonds at par. Each bond had a par value of $1,000 and pays interest annually on December 31. Because the bonds were...

Q: Davis Company issued 11,250 of its $1,000

Davis Company issued 11,250 of its $1,000 par value bonds for $1,310, providing total cash proceeds of $14,737,500. Davis did not incur any bond issue costs. Bond interest is paid annually. The market...

Q: Tutte Company issued 3,000 of its 9%, 5-

Tutte Company issued 3,000 of its 9%, 5-year, $1,000 par value bonds. Bond interest is paid annually on December 31. The market rate on the date of issue was 15%. The market price of Tutte common shar...

Q: Lee Equipment Company issued 200 of 8-year, 6%

Lee Equipment Company issued 200 of 8-year, 6% convertible bonds for $227,200. Each bond had a par value of $1,000. Each $1,000 bond converts into eight shares of $1 par value common stock at the opti...

Q: Using the information from BE14-22, prepare the journal entry

Using the information from BE14-22, prepare the journal entry to record the bond conversion assuming that the balance of the unamortized premium on the date of conversion is $14,660. Data from BE14-2...

Q: Using the information from BE14-22, prepare the journal entry

Using the information from BE14-22, prepare the journal entry to record the bond issue assuming that Lee Equipment Company is an IFRS reporter. Data from BE14-22: Lee Equipment Company issued 200 of...

Q: Using the information from BE14-22, prepare the journal entry

Using the information from BE14-22, prepare the journal entry to record the bond conversion assuming that Lee Equipment Company is an IFRS reporter. Data from BE14-22: Lee Equipment Company issued 20...

Q: Determine whether each of the following convertible bonds has a beneficial conversion

Determine whether each of the following convertible bonds has a beneficial conversion option. Each bond has a $1,000 face value and is issued at par. a. Eight-year, 5% convertible bond converts to 50...

Q: Crow Company issued 6,000 of its $1,000

Crow Company issued 6,000 of its $1,000 par value bonds for $1,580, providing total cash proceeds of $9,480,000. The market price of Crow’s common shares on the date that it issued the bonds was $20 p...

Q: On January 1 of the current year, Brendan B Fashions granted

On January 1 of the current year, Brendan B Fashions granted 100,000 stock options to its division managers. The options are equity-classified awards. The plan permits the division managers to acquire...

Q: Eagle Builders, Inc. initiated a stock option plan for its

Eagle Builders, Inc. initiated a stock option plan for its employees on January 1 of the current year. The terms of the plan grant each employee 10 options to acquire 10 shares of the company’s $1 par...

Q: Using the information provided in BE14-28, prepare the journal

Using the information provided in BE14-28, prepare the journal entry to record the issuance of the bonds assuming that the incremental method is used and the market value of the warrants is not reason...

Q: Note the following partial income statement for Cassie Corporation for the current

Note the following partial income statement for Cassie Corporation for the current year. The company is subject to a 40% tax rate. We present share information for the current year in the following t...

Q: Merion Company provided the following share information for the current year

Merion Company provided the following share information for the current year. Merion reported income from continuing operations of $1,000,000 and a $430,000 loss from discontinued operations, net of...

Q: The following is a partial income statement for City Line Enterprises for

The following is a partial income statement for City Line Enterprises for the current year. City Line provided the following information about its capital structure. The company had employee options t...

Q: Using the information provided in E16-6, satisfy the following

Using the information provided in E16-6, satisfy the following requirements assuming that the equity securities held by Armonico Capital do not have a readily determinable fair value because neither c...

Q: Do companies with equity-based compensation plans make adjustments for changes

Do companies with equity-based compensation plans make adjustments for changes in the market price of the stock?

Q: Advanced Computer Systems reported the following shareholders’ equity section as of the

Advanced Computer Systems reported the following shareholders’ equity section as of the beginning of the current year: Advanced Computer issued 125,000 shares of its $.50 par common...

Q: The following information is from the books of OZP Farms, Inc

The following information is from the books of OZP Farms, Inc. regarding its employee stock options. The firm granted options on January 2, 2018, that permit employees to acquire 100,000 shares of $1....

Q: The market price of a security is $40. Its expected

The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta double...

Q: A bond has a par value of $1,000,

A bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8% with interest paid annually. If the current market price is $800, what will be the percentage capital gain of...

Q: You are bullish on Telecom stock. The current market price is

You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per y...

Q: You are bearish on Telecom and decide to sell short 100 shares

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker’s...

Q: The stock of Nogro Corporation is currently selling for $10 per

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year...

Q: The risk-free rate of return is 8%, the expected

The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings i...

Q: Chiptech, Inc., is an established computer chip firm with several

Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 per share last year and just...

Q: On June 30, the board of directors of Sandals, Inc

On June 30, the board of directors of Sandals, Inc., declares a 100% stock dividend on its 30,000, $1 par, common shares. The market price of Sandals common stock is $35 on June 30. Record the stock d...

Q: Refer to the situation described in BE10–11, but assume

Refer to the situation described in BE10–11, but assume a 2-for-1 stock split instead of the 100% stock dividend. Explain why Sandals did not record a 2-for-1 stock split. What are the number of share...

Q: On September 1, the board of directors of Colorado Outfitters,

On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 10,000, $1 par, common shares. The market price of the common stock is $30 on this date. Required:...

Q: CanaCo showed the following equity on its December 31, 2020,

CanaCo showed the following equity on its December 31, 2020, balance sheet: The shareholders of CanaCo expressed concerns to the board of directors at the recent annual meeting that the market price o...

Q: Arcus Development Inc.’s equity section on the December 31,

Arcus Development Inc.’s equity section on the December 31, 2019, balance sheet showed the following information: Common shares, unlimited shares authorized, 210,000 shares issued and outstanding = $3...

Q: Bandara Gold Inc.’s equity section on the October 31,

Bandara Gold Inc.’s equity section on the October 31, 2020, balance sheet showed the following information: Common shares, unlimited shares authorized, 600,000 shares issued and outstanding = $1,800,0...

Q: On March 1, 2020, VisionTech Inc.’s board of

On March 1, 2020, VisionTech Inc.’s board of directors declared a 5% share dividend when the market price per share was $10.00. On November 15, 2020, the board of directors declared a 4:1 share split....

Q: CHECK FIGURES: 1. Profit = $393,400;

CHECK FIGURES: 1. Profit = $393,400; 2. Total assets = $2,851,250; Total equity = $2,614,650 LR Enterprises Inc. had the following equity account balances at December 31, 2019: Sales during 2020 total...

Q: 1. Which of the following is not an advantage of the

1. Which of the following is not an advantage of the corporate form for organizations: a. Ownership rights are easily transferable b. Continuous life c. Corporate taxation d. Ease of capital accumulat...

Q: 1. A share dividend involves the distribution of which of the

1. A share dividend involves the distribution of which of the following items: a. Shares of the company’s stock without receiving any payment in return b. Income of the company based on the amount dec...

Q: 1. Which of the following terms does not refer to the

1. Which of the following terms does not refer to the stated coupon rate of the bond? a. Nominal Rate b. Market Rate c. Contract Rate d. All of the above. 2. Financial leverage is an important financ...

Q: The equity accounts for Kalimantan Corp. showed the following balances on

The equity accounts for Kalimantan Corp. showed the following balances on December 31, 2019: The company completed these transactions during 2020: Jan. 10 Issued 20,000 common shares at $9.60 cash per...

Q: Venir Exchange Corp. had the following equity account balances at December

Venir Exchange Corp. had the following equity account balances at December 31, 2019: On November 1, 2020, the board of directors declared and paid the current year’s cash dividend on...

Q: Kaye Biotech Inc. had the following equity account balances at December

Kaye Biotech Inc. had the following equity account balances at December 31, 2019: On February 1, 2020, 5,100 preferred shares were issued at $7.80 each. The board of directors declared and paid the an...

Q: On January 1, 2017, Kittle Corporation issued five-year

On January 1, 2017, Kittle Corporation issued five-year, 4% bonds payable with a face value of $2,500,000. The bonds were issued at 95 and pay interest on January 1 and July 1. Kittle amortizes bond...

Q: On January 1, 2017, Ditchey Corporation issued five-year

On January 1, 2017, Ditchey Corporation issued five-year, 6% bonds payable with a face value of $3,500,000. The bonds were issued at 96 and pay interest on January 1 and July 1. Ditchey amortizes bond...

Q: The stockholders’ equity section of the balance sheet for Warren Corporation on

The stockholders’ equity section of the balance sheet for Warren Corporation on August 16, 2019, follows: On August 16, 2019, the market price of Warren common stock was $20 per sh...

Q: The stockholders’ equity section of the balance sheet for Yarrow Yogurt Company

The stockholders’ equity section of the balance sheet for Yarrow Yogurt Company on August 12, 2019, follows: On August 12, 2019, the market price of Yarrow common stock was $18 per...

Q: Lancaster Corporation, an investment banking company, often has extra cash

Lancaster Corporation, an investment banking company, often has extra cash to invest. Suppose Lancaster buys 500 shares of Knight Corporation stock at $40 per share, representing less than 5% of Knigh...

Q: Amherst Corporation, an investment banking company, often has extra cash

Amherst Corporation, an investment banking company, often has extra cash to invest. Suppose Amherst buys 900 shares of Hurricane Corporation stock at $57 per share, representing less than 5% of Hurric...

Q: Sullivan Medical Goods is embarking on a massive expansion. Assume plans

Sullivan Medical Goods is embarking on a massive expansion. Assume plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing...

Q: Medical Goods is embarking on a massive expansion. Assume the plans

Medical Goods is embarking on a massive expansion. Assume the plans call for opening 20 new stores during the next two years. Each store is scheduled to be 30% larger than the company’s existing locat...

Q: Comparative financial statement data of Hamden Optical Mart follow: /

Comparative financial statement data of Hamden Optical Mart follow: Other information: 1. Market price of Hamden Optical Mart common stock: $48.15 at December 31, 2018, and $39.96 at December 31, 2...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Edge Corporation stock or GoBee Company stock and have assembled the following data for the...

Q: Comparative financial statement data of Stow Optical Mart follow: /

Comparative financial statement data of Stow Optical Mart follow: Other information: 1. Market price of Stow Optical Mart common stock: $122.91 at December 31, 2018, and $165.75 at December 31, 2017...

Q: Assume that you are considering purchasing stock as an investment. You

Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Border Corporation stock or Celebration Company stock and have assembled the following data...

Q: Continental Bank, a nationwide banking company, owns many types of

Continental Bank, a nationwide banking company, owns many types of investments. Continental paid $550,000 for equity securities on December 5. Continental owns less than 10% of the stock of the compan...

Q: Refer to the Continental data in E-Q-32.

Refer to the Continental data in E-Q-32. On December 31, Continental’s balance sheet should report a. dividend revenue of $37,000. b. investment in equity securities of $554,000. c. investment in e...

Q: Flores Company purchases 900 shares of Sherman Express common stock at the

Flores Company purchases 900 shares of Sherman Express common stock at the market price of $79.24 on March 23, 2018. (Flores’ investment in Sherman represents less than 5% of the outstanding stock of...

Q: Use the data from E-S-3 for this exercise

Use the data from E-S-3 for this exercise. At year-end on December 31, 2018, the Sherman common stock that Flores holds has a market price of $88.13 per share. Assuming that Flores has no other invest...

Q: Use the data from E-S-3 and E-

Use the data from E-S-3 and E-S-4 for this exercise. Flores sells its entire investment of the Sherman common stock on November 22, 2019, for a total of $67,050. Record the entries for the sale. Data...

Q: You are the manager of a firm that sells a “commodity

You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, perfect competition, and your analytics team estimates that your cost function is C(Q) = 2Q + 3Q2...

Q: Viking InterWorks is one of many manufacturers that supply memory products to

Viking InterWorks is one of many manufacturers that supply memory products to original equipment manufacturers (OEMs) of desktop systems. The CEO recently read an article in a trade publication that r...

Q: The A-1 Corporation supplies airplane manufacturers with preformed sheet metal

The A-1 Corporation supplies airplane manufacturers with preformed sheet metal panels that are used on the exterior of aircraft. Manufacturing these panels requires only five sheet metalâ€&...

Q: Two firms compete in a homogeneous product market where the inverse demand

Two firms compete in a homogeneous product market where the inverse demand function is P = 20 − 5Q (quantity is measured in millions). Firm 1 has been in business for one year, while firm 2 just recen...

Q: Recently, the spot market price of U.S. hot

Recently, the spot market price of U.S. hot rolled steel plummeted to $400 per ton. Just one year ago, this same ton of steel cost $700. According to Metals Monitor, the drop in price was due to falli...

Q: You are a new entrant in a market with just one incumbent

You are a new entrant in a market with just one incumbent, who sells a roughly equivalent product. You initially take on the follower role when it comes to choosing the amount of your product to manuf...

Q: You are the manager of Gear Net and must decide how many

You are the manager of Gear Net and must decide how many Internet hubs to produce to maximize your firm’s profit. Gear Net and its only rival (Net Works) sell dual-speed Internet hub...

Q: Listed here are the stockholders’ equity sections of three public companies for

Listed here are the stockholders’ equity sections of three public companies for 2017 and 2018. Note that for General Mills these data are for the fiscal years ended on May 26, 2019 (...

Q: Listed here are data for five companies. These data are for

Listed here are data for five companies. These data are for the companies’ 2019 fiscal years. The market price per share is the closing price of the companies’ stoc...

Q: For each of the following statements regarding dividends, indicate whether it

For each of the following statements regarding dividends, indicate whether it is true or false. 1. Cash and stock dividends reduce retained earnings. 2. Dividends payable is recorded at the time a cas...

Q: The Brazilian Equity Fund, Inc., is a nondiversified, publicly

The Brazilian Equity Fund, Inc., is a nondiversified, publicly traded, closed-end investment company incorporated under the laws of Maryland. As a closed-end fund, it has a fixed number of outstanding...

Q: In August, Bunge Corporation, a grain dealer, and Recker

In August, Bunge Corporation, a grain dealer, and Recker, a farmer, entered into a written contract under which Recker agreed to sell to Bunge ten thousand bushels of No. 2 yellow soybeans to be grown...

Q: Seller manufactures furnace-grade carbon black, a filler used in

Seller manufactures furnace-grade carbon black, a filler used in tires and other rubber and plastic products. Buyer was a longtime customer of Seller, purchasing three grades of carbon black for use i...

Q: Eternal Rest Limited (ERL) is a public company; its

Eternal Rest Limited (ERL) is a public company; its shares are traded on a stock exchange in Canada. ERL operates both funeral homes and cemeteries in Canada. Funeral services (casket, flowers, cemete...

Q: In a summer plagued by drought and heat, many Southern crops

In a summer plagued by drought and heat, many Southern crops are withering in the fields, taking farmers’ profits down with them. Some farmers are fighting to break even. But others have had to give u...

Q: On October 15, 2023, the board of directors of Martinez

On October 15, 2023, the board of directors of Martinez Materials Corporation approved a stock option plan for key executives. On January 1, 2024, 20 million stock options were granted, exercisable fo...

Q: On December 31, 2023, Dow Steel Corporation had 600,

On December 31, 2023, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. ∙ Dow i...

Q: On December 31, 2023, Dow Steel Corporation had 600,

On December 31, 2023, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common st...

Q: On January 1, 2024, Daewoo Industries had outstanding 440,

On January 1, 2024, Daewoo Industries had outstanding 440,000 common shares ($l par) that originally sold for $20 per share, and 4,000 shares of 10% cumulative preferred stock ($100 par), convertible...

Q: At January 1, 2024, M. E. Gaynor Corporation

At January 1, 2024, M. E. Gaynor Corporation had outstanding the following securities: The following additional information is available: ∙ On September 1, 2024, M. E. Gaynor sold 72...

Q: Walters Audio Visual, Inc., offers a stock option plan to

Walters Audio Visual, Inc., offers a stock option plan to its regional managers. On January 1, 2024, 40 million options were granted for 40 million $1 par common shares. The exercise price is the mark...

Q: JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are

JBL Aircraft manufactures and distributes aircraft parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, JBL granted options...

Q: Conrad Playground Supply underwent a restructuring in 2024. The company conducted

Conrad Playground Supply underwent a restructuring in 2024. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2024 before any...

Q: The comparative balance sheets for 2024 and 2023 and the statement of

The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for Dux Company. Additional information from Dud’s accounting records is provide...

Q: The comparative balance sheets for 2024 and 2023 and the income statement

The comparative balance sheets for 2024 and 2023 and the income statement for 2024 are given below for Arduous Company. Additional information from Aldous’s accounting records is pro...

Q: In November 2024, the Brunswick Company signed two purchase commitments.

In November 2024, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2024. The second...

Q: The plant asset and accumulated depreciation accounts of Pell Corporation had the

The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2023: Transactions during 2024 were as follows: a. On January 2, 2024, equipment we...

Q: Under its executive stock option plan, National Corporation granted 12 million

Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2024, that permit executives to purchase 12 million of the company’s $1 par common shares within th...

Q: Fully vested incentive stock options exercisable at $50 per share to

Fully vested incentive stock options exercisable at $50 per share to obtain 24,000 shares of common stock were outstanding during a period when the average market price of the common stock was $60 and...

Q: Garcia Company granted 9 million of its no par common shares to

Garcia Company granted 9 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share...

Q: On January 1, 2024, Hugh Morris Comedy Club (HMCC

On January 1, 2024, Hugh Morris Comedy Club (HMCC) granted 1 million stock options to key executives exercisable for 1 million shares of the company’s common stock at $20 per share. The stock options...

Q: Refer to the situation described in BE 19–3. Suppose

Refer to the situation described in BE 19–3. Suppose that the options are exercised on April 3, 2027, when the market price is $19 per share. What journal entry will National record?

Q: The shareholders’ equity of Proactive Solutions, Inc., included the following

The shareholders’ equity of Proactive Solutions, Inc., included the following at December 31, 2024: Additional Information: • Proactive had 7 million shares of pre...

Q: IGF Foods Company is a large, primarily domestic, consumer Foods

IGF Foods Company is a large, primarily domestic, consumer Foods Company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy&acir...

Q: You are assistant controller of Stamps & Company, a medium-

You are assistant controller of Stamps & Company, a medium-sized manufacturer of machine parts. On October 22, 2023, the board of directors approved a stock option plan for key executives. On January...

Q: On October 6, 2024, the Elgin Corporation signed a purchase

On October 6, 2024, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2025. The company’s fiscal year-end is December 31. The contract was exe...

Q: In March 2024, the Metal Tool Company signed two purchase commitments

In March 2024, the Metal Tool Company signed two purchase commitments. The first commitment requires Metal to purchase inventory for $100,000 by June 15, 2024. The second commitment requires the compa...

Q: Allied Paper Products, Inc., offers a restricted stock award plan

Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2024, the company granted 16 million of its $1 par common shares, subject to forfeiture if emplo...

Q: In order to encourage employee ownership of the company’s $1 par

In order to encourage employee ownership of the company’s $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction....

Q: On December 31, 2023, Barclay Inc. had 200 million

On December 31, 2023, Barclay Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2024, Barclay purcha...

Q: On December 31, 2023, Barclay Inc. had 200 million

On December 31, 2023, Barclay Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2024, Barclay purcha...

Q: On December 31, 2023, Barclay Inc. had 200 million

On December 31, 2023, Barclay Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2024, Barclay purcha...

Q: On January 1, 2024, True Fashions Corporation awarded restricted stock

On January 1, 2024, True Fashions Corporation awarded restricted stock units (RSUs) representing 12 million of its $1 par common shares to key personnel, subject to forfeiture if employment is termina...

Q: As part of its executive compensation plan, Vertovec Inc. granted

As part of its executive compensation plan, Vertovec Inc. granted 54,000 of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. Vertovec’s com...

Q: Justin Short Foods granted 18 million of its no-par common

Justin Short Foods granted 18 million of its no-par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per s...

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics (IE) granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2024. At exercise, holders of the SARs...

Q: As part of its stock-based compensation package, International Electronics

As part of its stock-based compensation package, International Electronics granted 24 million stock appreciation rights (SARs) to top officers on January 1, 2024. At exercise, holders of the SARs are...

Q: As part of its stock-based compensation package, on January

As part of its stock-based compensation package, on January 1, 2024, International Electronics granted restricted stock units (RSUs) representing 50 million $1 par common shares. At exercise, holders...

Q: Magnetic-Optical Corporation offers a variety of share-based compensation

Magnetic-Optical Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock unit plan, the company on January 1, 2024, granted restricted stock units (RSUs...

Q: On January 1, 2024, Vijay Communications granted restricted stock units

On January 1, 2024, Vijay Communications granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated with...

Q: Heidi Software Corporation provides a variety of share-based compensation plans

Heidi Software Corporation provides a variety of share-based compensation plans to its employees. Under its executive stock option plan, the company granted options on January 1, 2024, that permit exe...

Q: On January 1, 2024, Adams-Men eke Corporation granted

On January 1, 2024, Adams-Men eke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares withi...

Q: Martinez Audio Visual Inc. offers an incentive stock option plan to

Martinez Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2024, options were granted for 40 million $1 par common shares. The exercise price is the marke...

Q: SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are

SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share based compensation plans. Under its nonqualified stock option plan, SSG granted options...

Q: Parsons, Inc., is a publicly owned company. The following

Parsons, Inc., is a publicly owned company. The following information is excerpted from a recent balance sheet. Dollar amounts (except for per-share amounts) are stated in thousands. Instructions: F...

Q: Ashton Company was experiencing financial difficulty late in the current year.

Ashton Company was experiencing financial difficulty late in the current year. The company’s income was sluggish, and the market price of its common stock was tumbling. On December 21, the company beg...

Q: Ashton Company was experiencing financial difficulty late in the current year.

Ashton Company was experiencing financial difficulty late in the current year. The company’s income was sluggish, and the market price of its common stock was tumbling. On December 21, the company beg...

Q: Listed are 12 technical accounting terms discussed in this chapter.

Listed are 12 technical accounting terms discussed in this chapter. Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the term desc...

Q: Smelling Company declared a 2-for-1 stock split on

Smelling Company declared a 2-for-1 stock split on its common stock in order to intentionally reduce the market value of its stock so that it would be an attractive investment for a larger set of inve...

Q: Categorize the following transfer prices as being market based, negotiated,

Categorize the following transfer prices as being market based, negotiated, or cost based. a. The market price of a widget is $25, the cost is $15, and the actual transfer price is $22, the market pri...

Q: Obtain from your the Internet, your college library, or other

Obtain from your the Internet, your college library, or other source the most recent annual report of a publicly owned company of your choice. a. Using the annual report data, compute the basic measur...

Q: In the stock market crash of October 19, 1987, the

In the stock market crash of October 19, 1987, the market price of IBM’s capital stock fell by over $31 per share. Explain the effects, if any, of this decline on the recorded stockholders’ equity in...

Q: Important information concerning a company’s operating performance can be found in its

Important information concerning a company’s operating performance can be found in its income statement and statement of financial position (balance sheet). Using the search mechanism of your choice,...

Q: Inland Co., has a total of 40,000 shares of

Inland Co., has a total of 40,000 shares of common stock outstanding and no preferred stock. Total stockholders’ equity at the end of the current year amounts to $2.5 million, and the market value of...

Q: Explain the significance of par value. Does par value indicate the

Explain the significance of par value. Does par value indicate the reasonable market price for a share of stock? Explain

Q: Meager Mining, Inc., has just discovered two new mining sites

Meager Mining, Inc., has just discovered two new mining sites for iron ore. Geologists and engineers have come up with the estimates on the following page regarding costs and ore yields if the mines a...

Q: Timberlake Corporation is a publicly owned company. The following information is

Timberlake Corporation is a publicly owned company. The following information is taken from a recent balance sheet. Dollar amounts (except for per-share amounts) are stated in thousands Instructions:...