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College Accounting Chapters 1-30 15th edition John Price, M. David Haddock, Michael Farina - Solutions
What are the corporation’s bylaws?
When common stock without a par value or a stated value is issued, what amount is credited to the capital stock account when the stock is issued?
What is the control account for the individual shareholder accounts in the common stockholders’ ledger?
Describe the flow of authority and responsibility in a corporate entity.
Who makes the day-to-day decisions necessary for a corporation to operate?
What does the term “restricted agency” mean?
What is meant by the “par value of stock”?
What is the purpose of the minute book?
How are the members of a corporation’s board of directors selected?
For several years, Herschel Anderson had operated Management Consulting Company as its sole proprietor. On January 1, 2019, he formed a partnership with Richard Harris to operate the company under the name Harris-Anderson Professional Management Consultants. Pertinent terms of the partnership
The following excerpts were taken from the 10-K Annual Report filed by TransMontaigne Partners, L.P., for the year ended December 31, 2015.Balance SheetsConsolidated Statements of IncomeAnalyze:1. On December 31, 2015, what percentage of total equity belongs to the general partner of TransMontaigne
Franklin Winston and Haley Thomas are partners in Technology Applications. The balances of their capital accounts on January 2, 2019, after revaluation of assets were Winston, $240,000, and Thomas, $320,000. Profits and losses are shared in the ratio of 55:45 between Winston and Thomas. The
Alicia Meeks and Charolette Hicks operate Uptown Apartments. Their partnership agreement provides for salaries of $120,000 a year for Meeks and $96,000 for Hicks and for an interest allowance of 10 percent on each partner’s invested capital at the beginning of the year. The remainder of the net
Edmond Veal operates a store that sells paintings and portraits by local artists. Veal has agreed to enter into a partnership with Sarah Cobb, effective January 1, 2019. The new firm will be called Artist€™s Supply Company. Veal is to transfer the assets and liabilities of his business to the
Betty Broker operates the Broker Broadcast Company. Her postclosing trial balance on December 31, 2019, is as follows:Broker agrees to enter into a partnership with Hattie Bingham, effective January 1, 2020. Profits and losses will be shared equally. Broker is to transfer the assets and liabilities
Dexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 2019. The capital account balances on January 1, 2019, after revaluation of
Lewis Wardell and Lewis Lomas own Lewis’ Antiques. Their partnership agreement provides for annual salary allowances of $200,000 for Wardell and $180,000 for Lomas, and interest of 10 percent on each partner’s invested capital at the beginning of the year. The remainder of the net income or
Rosie Wilsman and Rosa Escobedo own The Spring Flower Shop. The partnership agreement provides that Wilsman can withdraw $5,000 a month and Escobedo, $4,500 a month in anticipation of profits. The withdrawals, which are not considered to be salaries, were made each month. Net income and net losses
What are the major disadvantages of the partnership form of business entity?
The stockholder's equity accounts of Sky Inc. on January 1, 2019, contained the following balances:The transactions affecting stockholders’ equity during 2019 are given below. The worksheet at the end of 2019 showed a net loss of $5,000.INSTRUCTIONS1. Set up a ledger account (381) for
Knox Corp. has been authorized to issue 10,000 shares of 10 percent noncumulative, nonparticipating preferred stock with a par value of $100 per share and 10,000 shares of common stock with a stated value of $100 per share. As of December 31, 2019, 800 shares of preferred stock and 800 shares of
The stockholders€™ equity accounts of Jacob Corporation on January 1, 2019, contained the following balances:Transactions affecting stockholders€™ equity during 2019 follow.INSTRUCTIONS1. Set up a ledger account (381) for Retained Earnings and record the January 1, 2019, balance.2. Record
The Stockholders€™ Equity section of the balance sheets for Klee Corporation on December 31, 2018, and December 31, 2019, along with other selected account balances on the two dates is provided below. (Certain information is missing from the statements.) In 2019, the following
Refer to the 2015 Form 10-K (for the fiscal year ended January 31, 2016) for The Home Depot, Inc.Based on the data presented in the consolidated statements of earnings, answer the following:a. What approximate income tax rate does the company pay?b. Did the company record an accrual for current
HiTech Inc. has the following stockholders’ equity on June 30, 2019:Common Stock, $15 par (200,000 shares issued)............$3,000,000Paid-in Capital in Excess of Par..........................................2,000,000Retained
1. Three individuals are planning to form a new business. What are the five major types of entities that they can use to operate their business?2. Assume that you are the controller of a corporation. Some members of the board of directors have asked you how the firm can have a large balance in the
Texas Corporation had outstanding 100,000 shares of no-par-value common stock, with a stated value of $12, on December 1, 2019. The directors voted to split the stock on a 2-for-1 basis, issuing one new share to stockholders for each share presently owned. The estimated fair value of the new share
Char Corporation had outstanding 100,000 shares of $5 par-value common stock on August 13, 2019. On that date, it declared a 10 percent common stock dividend distributable on September 15 to stockholders of record on September 1. The estimated fair value of the shares at the time of their issue
Selected transactions of Joseph Corporation during 2019 follow. Record them in the general journal.Analyze: What annual per share dividend was paid to common stockholders in 2019? DATE TRANSACTIONS Mar. 15 Filed the federal income tax return for 2018. The total tax for the year was $135,000. During
The following are selected accounts from the general ledger of the Third Company on December 31, 2019. Show how the corporation’s Stockholders’ Equity section would appear on the December 31, 2019, balance sheet.Common Stock, $10 par, authorized 20,000 shares,issued and outstanding 10,000
On March 31, 2019, Elephant Corporation had outstanding 100,000 shares of 7 percent preferred stock with a par value of $10. The stock was originally issued for $12 per share. On that date, the corporation repurchased 10,000 shares of the preferred stock, paying cash of $13 per share for the
The city of Oakland contributed to Orange Corporation a tract of land on which to build a plant. When the contribution was made on May 10, 2019, the land’s appraised value was $350,000. Give the general journal entry, if any, necessary to record the receipt of the contribution.
Because of fears about the outcome of several lawsuits in progress during the years 2015 through 2019, Titan Corporation had appropriated retained earnings of $250,000, and transferred that amount from the Retained Earnings account to Retained Earnings Appropriated for Contingencies. In October
On December 31, 2019, the board of directors of Indiana Corporation voted to appropriate $150,000 of retained earnings each year for five years to establish a reserve for contingencies. Give the general journal entry on December 31, 2019, to record the appropriation.
On October 15, 2019, the board of directors of Trump Inc. declared a cash dividend of $2 per share on its 75,000 outstanding shares of common stock. The dividend is payable on November 15 to stockholders of record on October 30. Give any general journal entries necessary on October 15, October 30,
After the revenue and expense accounts were closed into Income Summary on December 31, 2019, the Income Summary account showed a net loss for the year of $50,000. Prepare the general journal entry to close the Income Summary account.
In each of the following situations, what is the amount of profit or loss? In each situation, what account will be debited and credited, and for what amount, in the journal entry to close the Income Summary account?a. The total of the Debit column in the Income Statement section of the worksheet
A corporation has paid estimated income taxes of $45,000 during the year 2019. At the end of the year, the corporation’s tax bill is computed to be $49,500. Give the general journal entry to adjust the Income Tax Expense account.
What is the purpose of the statement of stockholders’ equity?
What information is shown on the statement of retained earnings?
At what amount is treasury stock shown on the balance sheet? How is it classified on the balance sheet?
As an inducement for Paul Company to locate in Townville, the local chamber of commerce gave the corporation a tract of land with an appraised value of $250,000. How should the gift be accounted for by Paul?
What effect does an appropriation have on total retained earnings?
How is the Common Stock Dividend Distributable account classified in the financial statements?
1. Anna Claire and Baker are establishing a new restaurant and discussing whether to organize as a partnership or a corporation. What are some of the most important characteristics of these two types of organizations that they should weigh in making the decision?2. Anna Claire and Baker are
Vice president Eli Gold consults the board of directors in regard to the issuance of stock and negotiates an initial public offering price per share. As a bonus at the end of each fiscal year he receives stock options. Within weeks of negotiating the highest price possible, Gold sells his stock. Is
Just after its formation on September 1, 2019, the ledger accounts of Ducks, Inc., contained the following balances:Accrued Expenses Payable...........................................................$ 4,000Accounts
Nash Travel Inc., a new corporation, took over the assets and liabilities of Worldwide Travel Agency, owned by Roma David, on June 1, 2019. The assets and liabilities assumed, after appropriate revaluation by Worldwide Travel Agency, are as follows (amounts in parentheses are credits; others are
This problem consists of two parts.PART IA portion of the Stockholders’ Equity section of Bridge Corporation’s balance sheet as of December 31, 2019, appears below. Dividends have not been paid for the year 2018. There has been no change in the number of shares of stock issued and outstanding
Cate Corp. was organized on March 1, 2019, to operate a delivery service. The firm is authorized to issue 75,000 shares of no-par-value common stock with a stated value of $100 per share and 30,000 shares of $100 par-value, 8 percent preferred stock that is nonparticipating and noncumulative.
Cole Corporation, a new corporation, took over the assets and liabilities of Delta Art on January 2, 2019. The assets and liabilities, after appropriate revaluation by Cole, are as follows (amounts in parentheses are credits; other amounts are
This problem consists of two parts.PART IA portion of the Stockholders’ Equity section of Cailey Corporation’s balance sheet as of December 31, 2019, appears below. Dividends have not been paid for the years 2017 and 2018. There has been no change in the number of shares of stock issued and
Weston Company issued and has outstanding 114,000 shares of $10 par-value common stock and 3,000 shares of $50 par-value 25 percent preferred stock. The board of directors votes to distribute $7,500 as dividends in 2019, $10,500 in 2020, and $254,100 in 2021.INSTRUCTIONSCompute the total dividend
On January 2, 2019, AC Inc. issued 50,000 shares of its no-par-value common stock ($50 stated value) for cash at $51 a share. Give the entry in general journal form to record the issuance of the stock.
On May 1, 2019, Antonelli Corporation received a subscription from Angelina Paz for 700 shares of its $1 par-value common stock at a price of $28 a share.Paz made a payment of $14.00 per share on the stock at the time of the subscription. Give the entries in general journal form to record receipt
On January 2, 2019, Best Corporation issued 3,000 shares of its $15 par-value common stock for cash at $36 a share. Prepare the entry in general journal form to record the issuance of the stock.
On January 2, 2019, Cotton Inc. issued 35,000 shares of $10 par-value common stock and 5,000 shares of 8 percent, $50 par-value preferred stock for cash at par value. Prepare the entry in general journal form to record the issuance of the stock.
Alway Company, a newly organized corporation, received a bill from its lawyers for $10,000 for time spent in organizing the company.1. How should these costs be treated in the financial reports?2. How should they be treated for federal income tax purposes?
Roy Rodgers, the owner of a sole proprietorship, is planning to incorporate his business. His capital account has a balance of $480,000 after revaluation of the assets. His cash account totals $80,000. He will receive 8 percent, $100 par-value preferred stock with a total par value equal to the
Daily Corporation has outstanding 85,000 shares of $30 par-value preferred stock, issued at an average price of $37 a share. The preferred stock is convertible into common stock at the rate of three shares of common stock for each share of preferred stock. Neil Thomas owns 600 shares of the
Southern Food Corporation has outstanding 50,000 shares of noncumulative, 7 percent, $100 parvalue preferred stock and 100,000 shares of no-par-value common stock.1. During 2019, the corporation distributed dividends of $350,000. What amount will be paid on each share of preferred stock? What
Terrell Owens operates a small shop that sells fishing equipment. His postclosing trial balance on December 31, 2019, is shown below.Owens plans to enter into a partnership with Cathy Turner, effective January 1, 2020. Profits and losses will be shared equally. Owens is to transfer all assets and
Jack Tyler operates a store that sells computer software. Tyler has agreed to enter into a partnership with Oliver Preston, effective January 1, 2019. The new firm will be called Global Computing. Tyler is to transfer all assets and liabilities of his firm to the partnership at the values agreed
William, Henderson, and Middleton are partners, sharing profits and losses in the ratio of 40 to 30 to 30 percent, respectively. Their partnership agreement provides that if one of them withdraws from the partnership, the assets and liabilities are to be revalued, the gain or loss allocated to the
Nelson Ellis and Hank Tollis are partners who share profits and losses in the ratio of 40 to 60 percent, respectively. The balances of their capital accounts on December 31, 2018, are Ellis, $105,000, and Tollis, $115,000. With Tollis’s agreement, Ellis sells one-half of his interest in the
Tommy Riley and Derrick Victor are partners who share profits and losses in the ratio of 40:60, respectively. On December 31, 2019, they decide that Victor will sell one-half of his interest to John Lynch. At that time, the balances of the capital accounts are $130,000 for Riley and $180,000 for
The partnership agreement of Nellie Stayton and Jerald Williams does not indicate how the profits and losses will be shared. Before dividing the net income, Stayton’s capital account balance was $160,000, and Williams’s capital balance was $40,000. The net income of their firm for the year that
The net income for the new partnership known as The Convenience Place for the year ended December 31, 2019, was $17,000. The partners, Donald Jones and Amelda Loper, share profits in the ratio of 40 to 60 percent, respectively. Record the general journal entry (or entries) to close the Income
After revenue and expense accounts of The Quick Stop were closed on December 31, 2019, Income Summary contained a credit balance of $212,000. The drawing accounts of the two partners, Dan Eddy and Robert Jones, showed debit balances of $160,000 and $368,000, respectively. The partnership agreement
Alfred Hurley and Thomas Estes are partners who share profits and losses in the ratio of 70 to 30 percent, respectively. Their partnership agreement provides that each will be paid a yearly salary of $188,000. The salaries were paid to the partners during 2019 and were charged to the partners’
Reese and Cravens are partners. Their partnership agreement provides that, in dividing profits, each is to be allocated interest at 10 percent of her beginning capital balance. The balance of net income or loss after the interest allowances is to be split in the ratio of 70:30 to Reese and Cravens,
Connie Lacy and Lelia Cook are partners who share profits and losses in the following manner. Lacy receives a salary of $212,000 and Cook receives a salary of $300,000. These amounts were paid to the partners and charged to their drawing accounts. Both partners also receive 10 percent interest on
On May 1, 2019, Stanley Carpenter and Fred Kenamond formed The Wine Shop. The two partners invested cash and other assets and liabilities with the following agreed-upon values:Carpenter: Cash, $13,000; Merchandise inventory, $25,000; Equipment, $77,000; Accounts payable, $12,000.Kenamond: Furniture
Sarah Punter operates a sole proprietorship business that sells golf equipment. In 2019, Punter agrees to transfer her assets and liabilities to a partnership that will operate The Golf Shop. Punter will own a two-thirds interest in the capital of the partnership. The agreed-upon values of assets
In 2019, Selena Lopez invests cash of $110,000 in a newly formed partnership that will operate The Tennis Shop. In return, Lopez receives a one-third interest in the capital of the partnership. In general journal form, record Lopez’s investment in the partnership.
Why should the assets and liabilities of an existing partnership be revalued when a new partner is to be admitted by the investment of cash in the organization?
Explain what the term “mutual agency” means in regard to a partnership.
Explain how the net income of a partnership is allocated if it is less than the salary and interest allowances.
Are partners’ salaries considered to be expenses of the partnership? Explain.
What is the advantage of a limited partnership?
How does the balance sheet of a partnership differ from that of a sole proprietorship?
Why are assets of an existing sole proprietorship revalued when they are transferred to a partnership?
Does a partnership pay federal income tax? Explain.
The two partners in a business often pay personal bills by writing checks on the business bank account. Is this a good business practice? Explain. How should such payments be recorded?
Refer to The Home Depot, Inc., 2015 Annual Report ( for the fiscal year ended January 31, 2016) in Appendix A.1. Locate the Notes to Consolidated Financial Statements. Review Note 1, Summary of Significant Accounting Policies. What methods are used to depreciate the company’s furniture, fixtures,
Wheeless Company operates a real estate abstract, title, and insurance company. Below are selected transactions and events that occurred during the years 2019 to 2022. Using those transactions and events, follow the instructions given.INSTRUCTIONS1. Give the adjusting entries on December 31, 2020,
Selected accounts of the Mayo Medical Labs are listed below. Also given are some transactions and events that took place at the company during 2019.INSTRUCTIONS1. Record in general journal form the transactions for 2019 described.2. Record amortization of the intangible assets for the year ended
Liberty National Airlines is a small commercial airline operating in the United States. Because of poor economic conditions in the airline industry in 2019, Liberty National has eliminated some routes and reduced the frequency of flights on all other routes. As a result, the airline has
Campuzano Company acquired a mineral property and drilled an oil well in 2019. Capitalized costs subject to depletion totaled $800,000. When the well began producing in late 2019, it was estimated that one million barrels of oil could ultimately be produced from the property. In 2019, 5,000 barrels
Freedom Company purchased four identical machines on January 4, 2019, paying $9,000 for each machine. The useful life of each machine is expected to be five years, with no salvage value expected. The company uses the straight-line method of depreciation. Selected transactions involving the machines
The following transactions occurred at Wilson Company during 2019:INSTRUCTIONSIn each case, assume that straight-line depreciation is used and that depreciation was last recorded on December 31, 2018. Compute depreciation to the nearest whole dollar.1. Record in general journal form the two
On January 6, 2019, Harris Company purchased a computer (cost, $10,000; expected life, four years; estimated salvage value, $2,000) and an eight-passenger van (cost, $76,000; estimated life, eight years; estimated salvage value, $16,000). For financial accounting purposes, the company has always
Zulu Company purchased a carton fabrication unit for $495,000 on January 8, 2019. The machine’s useful life is estimated as 3,000,000 units of product or eight years and its salvage value is estimated at $45,000. The number of cartons fabricated in each year, 2019 to 2021, is as follows:Year
On January 5, 2019, Joshua Company purchased a new $325,000 machine with a five-year useful life and an estimated salvage value of $25,000.INSTRUCTIONSPrepare a schedule showing the annual depreciation and accumulated depreciation for each of the first three years of the asset’s life under (1)
On July 5, 2019, Clear Lake Company purchased a site for its new headquarters for $212,500. At a cost of $20,000, it razed two existing houses, with a total appraised value of $47,500, and received $11,500 from salvage. The firm also paid $6,000 in attorney’s fees, $1,000 in inspection fees, and
Selected accounts of the Brecha Company are listed below. On January 1, 2019, the only intangible asset in the company’s accounts was Goodwill. This was recorded in 2012 when the company acquired another company and paid $150,000 more than the fair market value of the net identifiable tangible
Herron Realty Company owns a number of large office buildings in several cities in the United States. One of the buildings is 16 years old and has had a large number of vacant office suites for several years. The building’s book value is $26.4 million. The company has examined carefully its
Yellowstone Mining Company had total depletable capitalized costs of $828,000 for a mine acquired in early 2019. It was estimated that the mine contained 920,000 tons of recoverable ore when production began. During 2019, 46,000 tons were mined, and 174,800 tons were mined in 2020.INSTRUCTIONS1.
James Company purchased four identical machines on January 10, 2019, paying $5,500 for each. The useful life of each machine is expected to be five years, with a salvage value of $700 each. The company uses the straight-line method of depreciation. Selected transactions involving the machines
The transactions listed below occurred at Jarred Company during 2019:INSTRUCTIONSIn following these instructions, assume that straight-line depreciation is used and that depreciation was last recorded on December 31, 2018. Compute depreciation to the nearest whole dollar.1. Give the entries in
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