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accounting

Principles Of Financial Accounting 11th Edition Belverd E Needles, Marian Powers - Solutions

To answer the following questions, refer to CVS Corporation’s annual report in the Supplement to Chapter 5. Examine the balance sheets and the summary of significant accounting policies on property and equipment in the notes to the financial statements.1. What percentage of total assets in the
Refer to the annual report of CVS Corporation and to the financial statements of Southwest Airlines Co. in the supplement to Chapter 5 to answer the following questions;1. Prepare a table that shows the net amount each company spent on property and equipment (from the statement of cash flows), the
Indicate whether each of the following is an advantage or a disadvantage of using long-term bond financing rather than issuing common stock.1. Interest paid on bonds is tax deductible.2. Investment are sometimes not as successful as planned.3. Financial leverage can have a negative effect when
Place the number of the liability next to the statement to which it applies.1. Bonds payable2. Long-term notes payable3. Mortgage payable4. Long-term lease5. Pension liabilities6. Other post-retirement benefits7. Deferred income taxes________ a. May result in a capital lease________ b. Differences
Karib Corporation purchased a building by signing a $150,000 long-term mortgage with monthly payments of $1,200. The mortgage carries an interest rate of 8 percent. Prepare a monthly payment schedule showing the monthly payment, the interest for the month, the reduction in debt, and the unpaid
Rogers Paints, Inc., is considering the sale of two bands issues. Choice A is a $600,000 bond issue that pays semiannual interest of $32,000 and is due in 20 years. Choice B is a $600,000 bond issue that pays semiannual interest of $30,000 and is due in 15 years. Assume that the market interest
On April 1, 2010, Morimoto Corporation issued $8,000,000 in percent, five-years bonds at 98. The semiannual interest payment dates are April 1 and October 1. Prepare entries in journal form for the issue of the bond by Morimoto on April 1, 2010, and the first two interest payments on October 1,
On March 1, 2011, Fast Freight Company sold $400,000 of its 9 percent, 20-years bonds at 109.9. The semiannual interest payment dates are March 1 and September 1. The market interest rate is 8 percent. The firm’s fiscal year ends august 31. Prepare entries in journal form the record the sale of
The Silk Corporation has outstanding $200,000 of 8 percent bonds callable at 104. On December 1. Immediately after the payment of the semiannual interest and the amortization of the bond discount were recorded, the unamortized bond discount equated $ 5,250. On that date, $120,000 of the bonds were
The Tramot Corporation has $2,000,000 of percent bonds outstanding. There is $40,000 of unamortized discount remaining on the bonds after the March 1, 2011, semiannual interest payment. The bonds are convertible at the rate of 20 shares of $10 par value common stock for each $1,000 bond. On March
Downey Corporation sold $400,000 of 9 percent, 10-year bonds for face value on September 1, 2011. The issue date of the bonds was May 1, 2011. The company’s fiscal year ends on December 31, and this is its only bond issue. Record the sale of the bonds on September 1 and the first semiannual
On October 1, 2010, Tender corporation issued $500,000 of 9 percent bonds at 96. The bonds are dated October 1 and pay interest semiannually. The market rate of interest is 10 percent, and the company’s year end is December 31. Prepare the entries in journal form to record the issuance of the
Develop brief answers to each of the following questions:1. How does a lender assets the risk that a borrower may default-that is, not pay interest and principal when due?2. If a company with a high debt to equity ratio wants to increase its debt when the economy is weak, what kind of bond might is
Develop brief answers to each of the following questions:1. What determines whether bonds are issued at a discount, premium, or face value?2. Why does the market price of a bond vary over time?3. When is it acceptable to use the straight-line method to amortize a bond discount or premium?4. Why
Compute the interest coverage ratios for 2010 and 2011 from the partial income statements of Chimney Corporation the appear below. State whether the ration improved or worsened overtime.
Victory Corporation purchased a building by signing a $ 150,000 long-term mortgage with monthly payments of $2,000. The mortgage carries an interest rate $ 12 percent.1. Prepare a monthly payment schedule showing the monthly payment, the interest for the month, the reduction in debt, and the unpaid
Tapas Corporation has leased a piece of equipment that has a usefull life of 12 years. The terms of the lease are payments of $43,000 per year for 12 years. Tapas currently is able to borrow money at a long-term interest rate of 8 percent.1. Calculate the present value of the lease.2. Prepare the
Avanti, Inc., is considering the sale of two bond issues. Choice A is a $800,000 bond issue that pays semiannual interest of $64,000 and is due in 20 years. Choice B is a $800,000 bond issue that pays semiannual interest of $60,000 and is due in 15 years. Assume that the market interest rate for
Use the present value tables in the appendix on present value tables to calculate the issue price of a $300,000 bond issue in each of the following independent cases. Assume interest is paid semiannually.a. A 10-year, 8 percent bond issue; the market interest rate is 10 percent.b. A 10-year, 8
The state of Ohio needs to raise $25,000,000 for highway repairs. Officials are considering issuing zero coupon bonds, which do not require periodic interest payments. The current market interest rate for the bonds is 8 percent. What face value of bonds must be issued to raise the needed funds,
DNA Corporation issued $4,000,000 in 8 percent, 10-year bonds on February 1, 2010, at 115. Semiannual interest payment dates are January 31 and July 31. Use the straight-line method and ignore year-end accruals.1. With regard to the bond issue on February 1, 2010:a. How much cash is received?b. How
Nina Corporation issued $8,000,000 in 6 percent, five-year bonds on March 1, 2010, at 92. The semiannual interest payment dates are September 1 and March 1. Prepare entries in journal form for the issue of the bonds by Nina on March 1, 2010, and the first two interest payments on September 1, 2010,
The Smart Company sold $500,000 in 8 percent, 20-year bonds on April 1, 2011, at 105. The semiannual interest payment dates are March 31 and September 30. The market interest rate is 7.5 percent. The company’s fiscal year ends September 30. Use the effective interest method to calculate the
On March 1, 2010, Knap Corporation issued $1,200,000 of 6 percent, five-years bonds. The semiannual interest payments dates are February 28 and August 31. Because the market rate for similar investments was 7 percent, the bonds had to be issued at a discount. The discount on the issuance of the
The Rondo Corporation has outstanding $400,000 of 8 percent bonds callable at104. On September 1, immediately after recording the payment of the semiannual interest and the amortization of the discount, the unamortized bond discount equaled $10,500. On the date, $240,000 of the bonds was called and
The Jolly Corporation has $400,000 of 6 percent bonds outstanding. There is $20,000 of unamortized discount remaining on these bonds after the July 1, 2011, semiannual interest payment. The bonds are convertible at the rate of 20 shares of $5 per value common stock for each $1,000 bond. On July1,
The long-term debt section of Midwest Corporation's balance sheet at the end of its fiscal year, December 31, 2010, is as follows:Using the effective interest method, prepare entries in journal form relevant to the interest payments on July 1, 2011, December 31, 2011, and January 1, 2012. Assume a
Anna’s, Inc., has a $350,000, 4 percent bond issue that was issued a number of years ago at face value. There are now 10 years left on the bond issue, and the market increase rate is 8 percent. Interest is paid semiannually. The company purchases the bonds on the open market at the calculated
Jigar Tech, Inc., is authorized to issue $1,800,000 in bonds on June 1. The bonds carry a face interest rate of 9 percent, which is to be paid on June 1 and December 1. Prepare entries in journal form for the issue of the bonds by Jigar Tech, Inc., under the assumptions that(a) The bonds are issued
Arif Corporation sold $400,000 of 12 percent, 10-year bonds at face value on September 1, 2011. The issue date of the bonds was May 1, 2011.1. Record the sale of the bonds on September 1 and the first semiannual interest payments on November 1, 2011.2. The company’s fiscal year ends on December
Hinali Corporation issued $1,000,000 of 7 percent bonds on October 1, 2010 at 96. The bonds are dated October 1 and pay interest semiannually. The market interest rate is 8 percent, and Hinala’s fiscal year ends on December 31. Prepare the entries in journal form to record the issuance of the
Shen Corporation can either lease or buy a small garage next to its business that will provide parking for its customers. The company can lease the building for a period of 12 years, which approximates the useful life of the facility and thus qualifies as a capital lease. The terms of the lease are
Listed below are common terms associated with bonds:a. Bond certificateb. Bond issuec. Bond indentured. Unsecured bondse. Debenture bondsf. Secured bondsg. Term bondsh. Serial bondsi. Registered bondsj. Coupon bondsk. Callable bondsl. Convertible bondsm. Face interest raten. Market interest rateo.
Murcia Corporation has $4,000,000 if 8 percent, 25-year bonds dated May1, 2011, with interest payable on April 30 and October 31. The company’s fiscal year ends on December 31, and it uses the straight-line method to amortize bond premiums or discounts. The bonds are callable after 10 years at
Dygat Corporation has $10,000,000 of 9 percent, 20-year bonds dated June 1, 2010 with interest payment dates of May 31 and November 30. The company’s fiscal year ends November 30. It uses the effective interest method to amortize bond premiums or discounts.Required1. Assume the bonds are issued
Johson Corporation issued bonds twice during 2010. The transactions were as follows:2010Jan 1Issued $1,000,000 of 7.5 percent, 10-year bonds dated January 1, 2010, with interest payable on June 30 and December 31. The bonds were sold at 96.6, resulting in an effective interest rate of 8
Golden Corporation has $20,000,000 of 7 percent, 20-year bonds dated June 1, 2010, with interest payment dates of May 31 and November 30. After 10 years, the bonds are callable at 104, and each $1,000 bonds Is convertible into 25 shares of $20 par value common stock. The company fiscal year ends
Jose Corporation has $4,000,000 of 9 percent, 25-year bonds dated March 1, 2010, with interest payable on February 28 and August 31. The company’s fiscal year end in February 28. It uses the effective interest method to amortize both premiums or discounts. (Round amounts to the nearest
Rago Corporation issued bonds twice during 2010. A summary of the transactions involving the bonds follows:2010Jan 1 Issued $3,000,000 of 7 percent, 10-year bonds dated January 1, 2010, with interest payable on June 30 and December 31. The bonds were sold at 107.4, resulting in an effective
Many companies use long-term leases to finance long-term assets. Although these leases are similar to mortgage payments, they are structured in such a way that they qualify as operating leases. As a result, the lease commitments do not appear on the companies’ balance sheets.In a recent year,
Eastman Kodak, the photography company, issued a $1 billion bond issue. Even though the company’s credit rating was low, the bond issue was well received by the investment community because the company offered attractive terms. The offering comprised $500 million of 10-year unsecured notes and
Dow chemical is one of the largest chemical companies in the world. Among its long-term liabilities was bond due in 2011 that carried a face interest rate of 6.125 percent.13 This bond sold on the New York Stock Exchange at 104 5/8. Did this bond sell at a discount or a premium? Assuming the bond
Amazon.com, Inc., gained renown as online marketplace for books, records, and other products. Although the increase in its stock price was initially meteoric, only recently has the company begun to earn a profit. To support its enormous growth, Amazon.com issued $500,000,000 in 6.845 percent
To answer the following questions, refer to the financial statements and the notes to the financial statements in CVS Corporation’s annual report in the Supplement to Chapter 5:1. Is it the practice of CVS to own or lease most of its building?2. Does CVS lease property predominantly under
Refer to the annual report of CVS corporation and the financial statements of Southwest Airlines Co. in the Supplement to Chapter 5. Calculate the debt to equity ratio and the interest coverage ratio for the both companies’ two most recent years. Find the note to the financial statements that
Management accounting differs from financial accounting in a number of ways. Indicate whether each of the following characteristics relates to management accounting (MA) or financial accounting (FA):1. Publically reported2. Forward looking3. Usually confidential4. Complies with accounting
Organizations stake out different strategic positions to add value and achieve success. Some strive to be low-cost leaders like Wal-Mart, while other become the high-end quality leaders like Whole Foods Market. Indentify which of the following organizations are low-cost leaders (C) and which are
Indicate whether each of the following management activities in a department store is part of planning (PL), performing (PE), evaluating (E), or communicating (C):1. Completing a balance sheet and income statement at the end of the year2. Training a clerk to complete a cash sale3. Meeting with
Molly Metz, president of Metz Industries, asked controller Rick Caputo to prepare a report on the use of electricity by each of the organization’s five divisions. Increase in electricity costs in the divisions ranged from 20 to 35 percent over the past year. What questions should Rick ask before
Indicate whether each of the following is part of the supply chain (SC), a primary process (PP) in the value chain, or a support service (SS) in the value chain:1. Human resources2. Research and development3. Supplier4. Management accounting5. Customer service6. Retailer
The following units costs were determined by dividing the total costs of each component by the number of produced. From these unit costs, determine the total cost per unit of primary processes and the total cost per unit of support services.Research and development ......... $1.40Human resources
The just-in-time operating environment focuses on reduction or eliminating the waste of resources. Resources include physical assets such as machinery and building, labor time, and materials and parts used in the production process. Choose one of the those resources and describe how it could be
In the balanced scorecard approach, stakeholder groups with different perspectives value different performance goals. Sometimes, however, they may be interested in the same goal. Indicate which stakeholder groups-financial (F), learning and growth (L), internal business process (P), and customers
Topher Sones, a management accountant for Beauty Cosmetics Company, has lunch every day with his friend Joel Saikle, who is a management accountant for Glowy Cosmetics, Inc., a Competitor of Beauty Cosmetics. Last week, Topher Couldn’t decide how to treat some information in a report he was
Explain this statement: “It is impossible to distinguish the point at which financial accounting ends and management accounting begins.”
In 1982, the IMA defined management accounting as follows:The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within the organization and to assure appropriate
Indicate whether each of the following management activities in a community hospital is part of planning (PL), evaluating (E), or communicating (C):1. Leasing five ambulances for the current year2. Comparing the actual number with the planned number of patient days in the hospital for the year.3.
John Jefferson is the sales managers for Sunny Greeting Cards, Inc. at the beginning of the year, the organization introduced a new line of humorous birthday cards to the U.S. market. Management held a strategic planning meeting on August 31 to discuss next year’s operating activities. One item
Edward Ortez has just opened a company that imports fine ceramic gifts from Mexico and sells them over the Internet. In planning his business, Ortez did the following;1. Listed his expected expenses and revenues for the first six months of operations2. Decided that he wanted the company to provide
As mentioned in E 6, Edward Ortez recently opened his own company. He has been thinking of ways to improve the business. Here is a list of the actions that he will be undertaking:1. Engaging an accountant to help analyze progress in meeting the objectives of the company.2. Hiring a company to
The item in the following list are associated with a hotel. Indicate which are part of the supply chain (S) and which are part of the value chain (V).1. Travel agency2. Housekeeping supplies3. Special events and promotions4. Customers service5. Travel bureau website6. Tour agencies
The reports that follow are from a grocery store. Which report would be used for financial purposes, and which would be used for activities-based decision making?Why?
As shown in the date that follow, a producer of ceiling fans has determined the units cost of its most popular model. From these unit costs, determine the total cost per unit of primary processes and the total cost per unit of support services.Research and development ........... $5.00Human
The following are excerpts from a conversation between two managers about their companies’ management systems. Identify the manager who works for a company that emphasizes ABM and the one who works for a company that emphasizes a JIT system.Manager 1: We try to manage our resources effectively by
Tim’s Bargain Basement sells used goods at very low prices. Tim has developed the following business objectives:1. To buy only the inventory that sells2. To have repeat customers3. To be profitable and grow4 To keep employee turnover lowTim also developed the following performance measures:5.
Your college’s overall goal is to add value to the communities it serves. In light of that goal, match each of the following stakeholders’ perspectives with the appropriate objective:Perspective Objective1. Financial (investors) 2. Learning and growth (employees) 3. Internal business
Katrina Storm went to work for NOLA Industries five years ago. She was recently promoted to cost accounting manager and now has a new boss, Vickery Howe, the corporate controller. Last week, Storm and Howe went to a two day professional development program on international accounting standards
To answer the following questions, conduct a search of several companies’ websites:(1) Does the company have an ethics statement?(2) Does it express a commitment to environmental or social issues?(3) In your opinion, is the company ethically responsible?Select one of the companies you researched
Clothing industries, Inc, is deciding whether to expand its line of women’s clothing called Sami Pants. Sales in units of this product were 22,500, 28,900, and 36,200 in 2010, 2011, and 2012, respectively. The product has been very profitable, averaging 35 percent profit (above cost) over the
Reigle Electronics is a manufacturer of cell phones, a highly competitive business. Reigle’s Phones carry a price of $99, but competition forces the company to offer significant discounts and rebates. As a result, the average price of Reigle’s cell phones has dropped to around $50, and the
Medic Produces Company (MPC) is known for developing innovative and high-quality products for use in hospitals and medical and dental offices. Its latest products is a nonporous, tough, and very thin disposable glove that will not leak or split and molds tightly to the hand, making it ideal for use
Howski Associates is an independent insurance agency that sells business, automobile, home, and life insurance. Maya Howski, senior partner of the agency, recently attended a workshop at the local university in which the balanced scorecard was presented as a way of focusing all of a company’s
Taylor Zimmer is the controller for Value Corporation. He has been with the company for 17 years and is being considered for the job chief financial officer. His boss, who is the current chief financial officer and former company controller, will be value Corporation’s new president. Zimmer has
Daisy Flowers recently purchased Yardworks, Inc., a wholesale distributor of equipment and supplies for lawn and garden care. The organization, which is headquartered in Baltimore, has four distribution centers that service 14 eastern states. The centers are located in Boston, Massachusetts; Rye,
Soft Sopt is a manufacturer of futon mattresses. Soft Spot’s mattresses are priced at $60, but competition forces the company to offer significant discounts and rebates. As a result, the average price of the futon mattress has dropped to around $50, and the company is losing money. Management is
Sport Products Company (SPC) is known for developing innovative high quality shoes for lacrosse. Its latest patented product is a tough, all-weather, and very flexible shoe. SPC buys the material it uses in making the shoes form another company, which manufactures it according to SPC’s exact
Resource College is a liberal arts school that provides local residents the opportunity to take college courses and earn bachelor’s degree. Yolanda Howard, the school’s provost, recently attended a workshop in which the balanced scorecard was presented as a way of focusing all of a
For almost a year, WEST Company has been changing its manufacturing process from a traditional to a JIT approach. Management has asked for employees’ assistance in the transition and has offered bonuses for suggestions that cut time from the production operation. Don Hanley and Jerome Obbo each
Obtain a copy of a recent annual report of a publicly held organiz.mon in which you have a particular interest. (Copies of annual reports are available at your campus library, at a local public library, on the Internet, or by direct request to an organization.) Assume that you have just been
In C 1, you examined your new employer’s annual report and found some useful information. However, you are interested in knowing whether your division’s products or services are competitive, and you were unable to find the necessary information in the annual report.1. What kinds of information
The registrar’s office of Mainland College is responsible for maintaining a record of each student’s grades and credits for use by students, instructors, and administrators.1. Assume that you are a manager in the registrar’s office and that you recently joined a team of managers to review the
McDonald’s is a leading competitor in the fast-food restaurant business. One component of McDonald’s marketing strategy is to increases sales by expanding its foreign markets. At present, McDonald’s restaurants operate in over 100 countries. In making decision about opening restaurants in
Working in a group of four to six students, select a local business. The group should become familiar with the background of the business by interviewing its manager or accountant. Each group member should identify several performance objectives for the business and link each objective with a
Each of the rest of the chapters in this text includes a “cookie company” case that shows how you could operate your own cookie business. In this chapter, you will express your company’s mission statement; set strategic, tactical, and operating objectives; decide on a name for your business;
Indicate whether each statement below is a reflection of(a) Voluntary association,(b) A partnership agreement,(c) Limited life,(d) Mutual agency, or(e) Unlimited liability.1. A partner may be required to pay the debts of the partnership out of personal assets.2. A partnership must be dissolved when
Bob contributes cash of $12,000, and Kim contributes office equipment that cost $10,000 but is valued at $8,000 to the formation of a new partnership. Prepare the entry in journal form to form the partnership.
During the first year, Bob and Kim partnership in SE 2 earned an income of $5,000. Assume the partners agreed to share income and losses in the ratio of the beginning balances of their capital accounts. How much income should be transferred to each Capital account?
During the first year, the Bob and Kim partnership in SE 2 earned an income of $5,000. Assume the partners agreed to share income and losses by figuring interest on the beginning capital balances at 10 percent and dividing the remainder equally. How much income should be transferred to each Capital
During the first year, the Bob and Kim partnership in SE 2 earned an income of $5,000. Assume the partners agreed to share income and losses by figuring interest on the beginning capital balances at 10 percent, allowing a salary of $6,000 to Bob, and dividing the reminder equally. How much income
After the partnership had been operating for a year, the Capital accounts of Bob and Kim are $15,000 and $10,000, respectively. Kim withdraws from the partnership by selling her interest in the business to Sonia for $8,000. What will be the Capital account balances of the partners in the new Bob
After the partnership has been operating for a year, the Capital accounts of Bob and Kim are $15,000 and $10,000, respectively. Sonia buys a one-sixth interest in the partnership by investing cash of $11,000. What will be the Capital account balances of the partners in the new Bob, Kim and Sonia
After the partnership has been operating for a year, the Capital accounts of Bob and Kim are $15,000 and $10,000, respectively. Sonia buys a one-fourth interest in the partnership by investing cash of $5,000. What will be the capital account balances of the partners in the new Bob, Kim, and Sonia
After the partnership has been operating for several years, the Capital accounts of Bob, Kim and Sonia are $25,000, $16,000, and $9,000, respectively. Sonia decides to leave the partnership and is allowed to withdraw $9,000 in cash. Prepare the entry in journal form to record the withdrawal on the
After the partnership has been operating for a year, the Capital accounts of Bob and Kim are $15,000 and $10,000, respectively. The firm has cash of $12,000 and office equipment of $13,000. The partners decide to liquidate the partnership. The office equipment is sold for only $4,000. Assuming the
Develop brief answers to each of the following questions:1. Why is it important for people to form partnership with people they can trust?2. When accounts receivable are transferred into a partnership, at what amount should they be recorded?3. What is a disadvantage of receiving a large salary as
Develop brief answers to each of the following questions:1. If the value of a partnership is worth far more than the book value of the assets on the balance sheet, would a new partner entering the partnership be more likely to pay a bonus to the old partners or receive a bonus from the old
Henri Mikels and Alex Jamison are watch repairmen who want to form a partnership and open a jewelry store. They have an attorney prepare their partnership agreement, which indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be
Elijah Samuels and Tony Winslow agreed to form a partnership. Samuels contributed $200,000 in cash, and Winslow contributed assets with a fair market value of $400,000. The partnership, in its initial year, reported net income of $120,000. Calculate the distribution of the first year’s income to
Assume that the partnership agreement of Samuels and Winslow in E 4 states that Samuels and Winslow are to receive salaries of $20,000 and $24,000, respectively; that Samuels is to receive 6 percent interest on his capital balance at the beginning of the year; and that the remainder of income and
Barbara and Karen operate a furniture rental business. Their capital balances on January 1, 2010, were $160,000 and $240,000, respectively. Barbara withdrew cash of $32,000 from the business on April 1, 2010. Karen withdrew $60,000 cash on October 1, 2010. Barbara and Karen distribute partnership

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