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Accounting Principles 9th Edition Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso - Solutions
Elkins Company sold $2,500,000, 8%, 10-year bonds on July 1, 2010.The bonds were dated July 1, 2010, and pay interest July 1 and January 1. Elkins Company uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.Instructions(a) Prepare all the
The following is taken from the Pinkston Company balance sheet.Interest is payable semiannually on January 1 and July 1.The bonds are callable on any semiannual interest date. Pinkston uses straight-line amortization for any bond premium or discount.From December 31, 2010, the bonds will be
On June 1, 2010, Mordica Corp. issued $2,000,000, 9%, 5-year bonds at face value. he bonds were dated June 1, 2010, and pay interest semiannually on June 1 and December 1. Financial statements are prepared annually on December 31.Instructions(a) Prepare the journal entry to record the issuance of
Mueller Co. sold $800,000, 9%, 10-year bonds on January 1, 2010. The bonds were dated January 1, and interest is paid on January 1 and July 1.The bonds were sold at 105.Instructions(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2010.(b) At December 31, 2010, the
Colt Electronics issues an $600,000, 8%, 10-year mortgage note on December 31, 2010, to help finance a plant expansion program. The terms provide for semiannual installment payments, not including real estate taxes and insurance, of $44,149. Payments are due June 30 and December 31.Instructions(a)
Presented below are three different lease transactions in which Ortiz Enterprises engaged in 2010.Assume that all lease transactions start on January 1, 2010. In no case does Ortiz receive title to the properties leased during or at the end of the lease term. Instructions(a) Identify the leases
On July 1, 2010, Wheeler Satellites issued $4,500,000 face value, 9%, 10-year bonds at $4,219,600.This price resulted in an effective-interest rate of 10% on the bonds. Wheeler uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and
On July 1, 2010, Remington Chemical Company issued $4,000,000 face value, 10%,10-year bonds at $4,543,627.This price resulted in an 8% effective-interest rate on the bonds. Remington uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on each
Suppan Company sold $6,000,000, 9%, 20-year bonds on January 1, 2010. The bonds were dated January 1, 2010, and pay interest on January 1 and July 1. Suppan Company uses the straight-line method to amortize bond premium or discount.The bonds were sold at 96.Assume no interest is accrued on June
Jinkens Corporation sold $4,000,000, 8%, 10-year bonds on January 1, 2010.The bonds were dated January 1, 2010, and pay interest on July 1 and January 1. Jinkens Corporation uses the straight-line method to amortize bond premium or discount. Assume no interest is accrued on June 30.Instructions(a)
The following is taken from the Nilson Corp. balance sheet. Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Nilson uses straight-line amortization for any bond premium or discount. From December 31, 2010, the bonds will be
Refer to the financial statements of PepsiCo, Inc. and the Notes to Consolidated Financial Statements in Appendix A.Instructions(a) What was PepsiCo’s total long-term debt at December 29, 2007? What was the increase/decrease in total long-term debt from the prior year? What does Note 9 to the
PepsiCo’s financial statements are presented in Appendix A. Financial statements of The Coca-Cola Company are presented in Appendix B.Instructions(a) Based on the information contained in these financial statements, compute the following 2007 ratios for each company.(1) Debt to total
Bond or debt securities pay a stated rate of interest. This rate of interest is dependent on the risk associated with the investment. Moody’s Investment Service provides ratings for companies that issue debt securities.Instructions(a) What year did Moody’s introduce the first bond rating? (See
On January 1, 2008, Carlin Corporation issued $2,400,000 of 5-year, 8% bonds at 95; the bonds pay interest semiannually on July 1 and January 1. By January 1, 2010, the market rate of interest for bonds of risk similar to those of Carlin Corporation had risen. As a result the market value of these
Joe Penner, president of Penner Corporation, is considering the issuance of bonds to finance an expansion of his business. He has asked you to(1) Discuss the advantages of bonds over common stock financing,(2) Indicate the types of bonds he might issue, and(3) Explain the issuing procedures used in
Sam Farr is the president, founder, and majority owner of Galena Medical Corporation, an emerging medical technology products company. Galena is in dire need of additional capital to keep operating and to bring several promising products to final development, testing, and production. Sam, as owner
Numerous articles have been written that identify early warning signs that you might be getting into trouble with your personal debt load. You can find many good articles on this topic on the Web.InstructionsFind an article that identifies early warning signs of personal debt trouble. Write up a
Nordham Corporation’s trial balance at December 31, 2010, is presented below. All 2010 transactions have been recorded except for the items described below and on the next page.Unrecorded transactions1. On January 1, 2010, Nordham issued 1,000 shares of $20 par, 6% preferred stock for
The characteristics of a partnership include the following:(a) Association of individuals,(b) Limited life, and(c) Co-Ownership of property. Explain each of these terms.
Jerry Kerwin is confused about the partnership characteristics of(a) Mutual agency and(b) Unlimited liability. Explain these two characteristics for Jerry.
Brent Houghton and Dick Kreibach are considering a business venture. They ask you to explain the advantages and disadvantages of the partnership form of organization.
Why might a company choose to use a limited partnership?
Blue and Grey are discussing how income and losses should be divided in a partnership they plan to form. What factors should be considered in determining the division of net income or net loss?
S. McMurray and F. Kohl share net income and net loss equally.(a) Which account(s) is (are) debited and credited to record the division of net income between the partners?(b) If S. McMurray withdraws $30,000 in cash for personal use in lieu of salary, which account is debited and which is credited?
Partners T. Evans and R. Meloy are provided salary allowances of $30,000 and $25,000, respectively. They divide the remainder of the partnership income in a ratio of 3: 2. If partnership net income is $45,000, how much is allocated to Evans and Meloy?
Are the financial statements of a partnership similar to those of a proprietorship? Discuss.
How does the liquidation of a partnership differ from the dissolution of a partnership?
Lowery, Keegan, and Feeney have income ratios of 5:3:2 and capital balances of $34,000, $31,000, and $28,000, respectively. Noncash assets are sold at a gain. After creditors are paid, $109,000 of cash is available for distribution to the partners. How much cash should be paid to Keegan?
Before the final distribution of cash, account balances are:Cash $23,000; S. Penn, Capital $19,000 (Cr.); L. Pattison,Capital $12,000 (Cr.); and M. Jeter, Capital $8,000 (Dr.).Jeter is unable to pay any of the capital deficiency. If the income-sharing ratios are 5:3:2, respectively, how much cash
Kate Robidou purchases for $72,000 Grant’s interest in the Sharon-Grant partnership. Assuming that Grant has a $66,000 capital balance in the partnership, what journal entry is made by the partnership to record this transaction?
Tracy Harper has a $39,000 capital balance in a partnership. She sells her interest to Kim Remington for $45,000 cash. What entry is made by the partnership for this transaction?
Debbie Perry retires from the partnership of Garland, Newlin, and Perry. She receives $85,000 of partnership assets in settlement of her capital balance of $77,000. Assuming that the income-sharing ratios are 5:3:2, respectively, how much of Perry’s bonus is debited to Newlin’s capital account?
How is a deceased partner’s equity determined?
Jennifer DeVine and Stanley Farrin decide to organize the ALL-Star partnership.DeVine invests $15,000 cash, and Farrin contributes $10,000 cash and equipment having a book value of $3,500.Prepare the entry to record Farrin’s investment in the partnership, assuming the equipment has a fair market
Beck and Cey decide to merge their proprietorships into a partnership called Fresh Start Company.The balance sheet of Cey Co. shows: The partners agree that the net realizable value of the receivables is $13,500 and that the fair market value of the equipment is $11,000. Indicate how the four
Held Bond Co. reports net income of $70,000. The income ratios are Held 60% and Bond 40%. Indicate the division of net income to each partner, and prepare the entry to distribute the net income.
ESU Co. reports net income of $55,000. Partner salary allowances are Espino $15,000, Sears $5,000, and Utech $5,000. Indicate the division of net income to each partner, assuming the income ratio is 50:30:20, respectively.
Joe & Sam Co. reports net income of $28,000. Interest allowances are Joe $7,000 and Sam $5,000; salary allowances are Joe $15,000 and Sam $10,000; the remainder is shared equally. Show the distribution of income on the income statement.
After liquidating noncash assets and paying creditors, account balances in the Heartley Co. areCash ....... $19,000A Capital (Cr.) .. $8,000L Capital (Cr.) ... $7,000AndF Capital (Cr.) .. $4,000The partners share income equally. Journalize the final distribution of cash to the partners.
Alpha Co. capital balances are: Ace $30,000, Bly $25,000, and Cox $20,000. The partners share income equally. Day is admitted to the firm by purchasing one-half of Cox’s interest for $13,000. Journalize the admission of Day to the partnership.
In Decker Co., capital balances are Menke $40,000 and Hibbett $50,000.The partners share income equally. Kosko is admitted to the firm with a 45% interest by an investment of cash of $52,000. Journalize the admission of Kosko.
Capital balances in Midway Co. are Messer $40,000, Isch $30,000, and Denny $18,000. Messer and Isch each agree to pay Denny $12,000 from their personal assets. Messer and Isch each receive 50% of Denny’s equity. The partners share income equally. Journalize the withdrawal of Denny.
Data pertaining to Midway Co. are presented in BE12-9. Instead of payment from personal assets, assume that Denny receives $24,000 from partnership assets in withdrawing from the firm. Journalize the withdrawal of Denny.
Indicate whether each of the following statements is true or false.1. Each partner is personally and individually liable for all partnership liabilities.2. If a partnership dissolves, each partner has a claim to the specific assets he/she contributed to the firm.3. In a limited partnership, all
Villa America Company reported net income of $85,000. The partnership agreement provides for salaries of $25,000 to S.Wiborg and $18,000 to G. Murphy. They divide the remainder 40% to Wiborg and 60% to Murphy. S.Wiborg asks your help to divide the net income between the partners and to prepare the
The partners of Clash Company have decided to liquidate their business. Noncash assets were sold for $125,000. The income ratios of the partners M. Jones, J. Strummer, and P. Simonon are 3:2:3, respectively. Complete the following schedule of cash payments for ClashCompany
Granger Company wishes to liquidate the firm by distributing the company’s cash to the three partners. Prior to the distribution of cash, the company’s balances are: Cash $66,000; Niles, Capital (Cr.) $47,000; Dowagiac, Capital (Dr.) $21,000; and Vandalia, Capital (Cr.) $40,000.The income
Shani Davis has prepared the following list of statements about partnerships.1. A partnership is an association of three or more persons to carry on as co-owners of a business for profit.2. The legal requirements for forming a partnership can be quite burdensome.3. A partnership is not an entity
K. Meissner, S. Cohen, and E. Hughes are forming a partnership. Meissner is transferring $50,000 of personal cash to the partnership. Cohen owns land worth $15,000 and a small building worth $80,000, which she transfers to the partnership. Hughes transfers to the partnership cash of $9,000,
Jack Herington has owned and operated a proprietorship for several years. On January 1, he decides to terminate this business and become a partner in the firm of Herington and Kaspar. Herington’s investment in the partnership consists of $12,000 in cash, and the following assets of the
F. Calvert and G. Powers have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for(1) Annual salaries of $20,000 for Calvert and $12,000 for Powers,(2) Interest at 10% on beginning capital balances, and(3) Remaining income or loss
O. Guillen (beginning capital, $60,000) and K.Williams (beginning capital $90,000) are partners. During 2010, the partnership earned net income of $70,000, and Guillen made drawings of $18,000 while Williams made drawings of $24,000.Instructions(a) Assume the partnership income-sharing agreement
For Starrite Co., beginning capital balances on January 1, 2010, are Gary Stark $20,000 and Jim Nyland $18,000. During the year, drawings were Stark $8,000 and Nyland $5,000. Net income was $30,000, and the partners share income equally.Instructions(a) Prepare the partners’ capital statement for
Moe, Larry, and Curly are forming The Stooges Partnership. Moe is transferring $30,000 of personal cash and equipment worth $25,000 to the partnership. Larry owns land worth $18,000 and a small building worth $75,000, which he transfers to the partnership. There is a long-term mortgage of $20,000
The Best Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Rodriguez $45,000 and Escobedo $20,000. The firm is liquidated, and $110,000 in cash is received for the noncash assets. Rodriguez and Escobedo income ratios are 60%
Data for The Best Company are presented in E12-8.InstructionsPrepare the entries to record:(a) The sale of noncash assets.(b) The allocation of the gain or loss on realization to the partners.(c) Payment of creditors.(d) Distribution of cash to the partners.
Prior to the distribution of cash to the partners, the accounts in the NJF Company are:Cash $28,000, Newell Capital (Cr.) $17,000, Jennings Capital (Cr.) $15,000, and Farley Capital (Dr.) $4,000.The income ratios are 5:3:2, respectively.Instructions(a) Prepare the entry to record(1) Farley’s
J. Lynn, M. Oller, and F. Tate share income on a 5 : 3 : 2 basis. They have capital balances of $30,000, $26,000, and $18,000, respectively, when Doc Duran is admitted to the partnership.InstructionsPrepare the journal entry to record the admission of Doc Duran under each of the following
G. Olde and R. Young share income on a 6 : 4 basis. They have capital balances of $100,000 and $70,000, respectively, when K.Twener is admitted to the partnership.InstructionsPrepare the journal entry to record the admission of K. Twener under each of the following assumptions.(a) Investment of
B. Cates, V. Elder, and S. Nguyen have capital balances of $50,000, $40,000, and $32,000, respectively. Their income ratios are 5 : 3 : 2. Nguyen withdraws from the partnership under each of the following independent conditions.1. Cates and Elder agree to purchase Nguyen’s equity by paying
H. Barrajas, T. Dingler, and R. Fisk have capital balances of $95,000, $75,000, and $60,000, respectively. They share income or loss on a 5 : 3 : 2 basis. Fisk withdraws from the partnership under each of the following conditions.1. Fisk is paid $68,000 in cash from partnership assets, and a bonus
Carson, Letterman, and O’Brien are partners who share profits and losses 50%, 30%, and 20%, respectively. Their capital balances are $100,000, $60,000, and $40,000, respectively.Instructions(a) Assume Stewart joins the partnership by investing $80,000 for a 25% interest with bonuses to the
The post-closing trial balances of two proprietorships on January 1, 2010, are presented below.Patrick and Samuelson decide to form a partnership, Pasa Company, with the following agreed upon valuations for noncash assets.All cash will be transferred to the partnership, and the partnership will
At the end of its first year of operations on December 31, 2010, CNU Company’s accounts show the followingThe capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners’ capital accounts.Instructions(a)
The partners in New Yorker Company decide to liquidate the firm when the balance sheet shows the following The partners share income and loss 5 : 3 : 2. During the process of liquidation, the following transactions were completed in the following sequence.1. A total of $55,000 was received from
At April 30, partners’ capital balances in SKG Company are: S. Seger $52,000, J. Kensington $54,000, and T. Gomez $18,000. The income sharing ratios are 5:4:1, respectively.On May 1, the SKGA Company is formed by admitting D. Atchley to the firm as a partner.Instructions(a) Journalize the
On December 31, the capital balances and income ratios in FAD Company are as follows Instructions(a) Journalize the withdrawal of Durham under each of the following assumptions.(1) Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Durham's ownership
The post-closing trial balances of two proprietorships on January 1, 2010, are presented below. John and Calvin decide to form a partnership, John-Calvin Company, with the following agreed upon valuations for noncash assets. All cash will be transferred to the partnership, and the partnership
At the end of its first year of operations on December 31, 2010, KAT Company’s accounts show the following.The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners’ capital accounts.Instructions(a)
The partners in Apache Company decide to liquidate the firm when the balance sheet shows the following. The partners share income and loss 5:3:2. During the process of liquidation, the transactions below were completed in the following sequence.1. A total of $57,000 was received from converting
At April 30, partners’ capital balances in BAB Company are: Barney $30,000. Andy $16,000, and Bea $15,000.The income-sharing ratios are 5:3:2, respectively. On May 1, the BABE Company is formed by admitting Ellen to the firm as a partner.Instructions(a) Journalize the admission of Ellen under
On December 31, the capital balances and income ratios in Canasta Company are as follows.Instructions(a) Journalize the withdrawal of Spade under each of the following independent assumptions.(1) Each of the remaining partners agrees to pay $15,000 in cash from personal funds to purchase Spade’s
Richard Powers and Jane Keckley, two professionals in the finance area, have worked for Eberhart Leasing for a number of years. Eberhart Leasing is a company that leases high-tech medical equipment to hospitals. Richard and Jane have decided that, with their financial expertise, they might start
You are an expert in the field of forming partnerships. Daniel Ortman and Sue Stafford want to establish a partnership to start “Pasta Shop,’’ and they are going to meet with you to discuss their plans. Prior to the meeting you will send them a memo discussing the issues they need to consider
Elizabeth and Laurie operate a beauty salon as partners who share profits and losses equally. The success of their business has exceeded their expectations; the salon is operating quite profitably. Laurie is anxious to maximize profits and schedules appointments from 8 a.m. to 6 p.m. daily, even
Eric Fink, a student, asks your help in understanding the following characteristics of a corporation:(a) Separate legal existence,(b) Limited liability of stockholders, and(c) Transferable ownership rights. Explain these characteristics to Eric.
(a) Your friend Vicky Biel cannot understand how the characteristic of corporation management is both an advantage and a disadvantage. Clarify this problem for Vicky.(b) Identify and explain two other disadvantages of a corporation
(a) The following terms pertain to the forming of a corporation:(1) Charter,(2) By-Laws, and(3) Organization costs. Explain the terms.(b) Linda Merando believes a corporation must be incorporated in the state in which its headquarters office is located. Is Linda correct? Explain.
What are the basic ownership rights of common stockholders in the absence of restrictive provisions?
(a) What are the two principal components of stockholders’ equity?(b) What is paid-in capital? Give three examples.
How do the financial statements for a corporation differ from the statements for a proprietorship?
The corporate charter of Hawes Corporation allows the issuance of a maximum of 100,000 shares of common stock. During its first two years of operations, Hawes sold70,000 shares to shareholders and reacquired 7,000 of these shares. After these transactions, how many shares are authorized, issued,
Which is the better investment-common stock with a par value of $5 per share, or common stock with a par value of $20 per share? Why?
What factors help determine the market value of stock?
What effect does the issuance of stock at a price above par value have on the issuer’s net income? Explain.
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 market, is $95 per share. Should the land be recorded at $20,000, $80,000, or $95,000? Explain with
For what reasons might a company like IBM repurchase some of its stock (treasury stock)?
Kwun, Inc. purchases 1,000 shares of its own previously issued $5 par common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on(a) Net income,(b) Total assets,(c) Total paid-in capital, and(d) Total stockholders’ equity?
The treasury stock purchased in question 14 is resold by Kwun, Inc. for $18,000.What effect does this transaction have on(a) Net income,(b) Total assets,(c) Total paid-in capital, and(d) Total stockholders’ equity?
(a) What are the principal differences between common stock and preferred stock?(b) Preferred stock may be cumulative. Discuss this feature.(c) How are dividends in arrears presented in the financial statements?
Ruiz Inc.’s common stock has a par value of $1 and a current market value of $15. Explain why these amounts are different.
Indicate how each of the following accounts should be classified in the stockholders’ equity section.(a) Common stock(b) Paid-in capital in excess of par value(c) Retained earnings(d) Treasury stock(e) Paid-in capital from treasury stock(f) Paid-in capital in excess of stated value(g) Preferred
Ken Fritz is studying for his accounting midterm examination. Identify for Ken the advantages and disadvantages of the corporate form of business organization.
At December 31, Kunkel Corporation reports net income of $450,000. Prepare the entry to close net income.
On May 10, Mazili Corporation issues 2,000 shares of $10 par value common stock for cash at $18 per share. Journalize the issuance of the stock.
On June 1, Mendoza Inc. issues 3,000 shares of no-par common stock at a cash price of $6 per share. Journalize the issuance of the shares assuming the stock has a stated value of $1 per share.
Kane Inc.’s $10 par value common stock is actively traded at a market value of $15 per share. Kane issues 5,000 shares to purchase land advertised for sale at $85,000. Journalize the issuance of the stock in acquiring the land.
On July 1, Goetz Corporation purchases 500 shares of its $5 par value common stock for the treasury at a cash price of $8 per share. On September 1, it sells 300 shares of the treasury stock for cash at $11 per share. Journalize the two treasury stock transactions.
Acker Inc. issues 5,000 shares of $100 par value preferred stock for cash at $130 per share. Journalize the issuance of the preferred stock.
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