Questions and Answers of Financial Accounting 13th Edition

At December 31, 2021, Atlantic Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts). Atlantic’s 2022 transactions
During the fourth quarter of 2021, Harvestology, Inc., generated excess cash, which the company invested in equity securities as follows: Requirements 1. Open T-accounts for Cash (including
Athens Company completed these long-term equity investment transactions during 2021: 1. Journalize Athens Company’s investment transactions. Explanations are not required.2. Assume the Techno
Use the data given in E-S-6. On May 21, 2022, Athens Company sold its investment in Techno mite stock for $28 per share.Data in E-S-6.Athens Company completed these long-term equity investment
On January 1, 2021, Western Motors paid $450 million for a 40% investment in Yaza Motors. Yaza earned net income of $65 million and declared and paid cash dividends of $45 million during 2021.1. What
On January 1, 2021, Downtown Industries purchased $8,000 of 4% JMK bonds at a price of 100 (par). Downtown intends to hold the bonds until their maturity date of January 1, 2024. The bonds pay
Brackett Insurance purchased $60,000 of 10% AMS bonds on January 1, 2021, at a price of 85 when the market rate of interest was 12%. Brackett intends to hold the bonds until their maturity date of
Using the data from E-S-12, calculate the amount of discount amortization (using the straight-line amortization method) on July 1, 2021, and record the related journal entry. What is the total
During the fourth quarter of 2021, Rainbarrel, Inc., generated excess cash, which the company invested in equity securities as follows:Requirements 1. Open T-accounts for Cash (including its
Using the data from E-S-12, make the adjusting entries that Brackett Insurance would need to make on December 31, 2021, related to the investment in AMS bonds. How would the bonds be reported on
Oregon Exchange Company completed the following long-term investment transactions during 2021: At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is
Using the data from E-S-15, make the adjusting entries that Glimmer Pools would need to make on December 31, 2021, related to the investment in AKL bonds. How would the bonds be reported on Glimmer
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
On September 30, 2021, Baytex, Inc., purchased 6.8% bonds of Whitmore Corporation at 98 as a long-term, held-to-maturity investment. The maturity value of the bonds will be $35,000 on September 30,
Illinois Exchange Company completed the following long-term investment transactions during 2021: At year-end, the fair value of the Amsterdam stock is $30,900. The fair value of the Exeter stock
On September 30, 2021, Rittex, Inc., purchased 5% bonds of McPhee Corporation at 97 as a long-term, held-to-maturity investment. The maturity value of the bonds will be $46,000 on September 30, 2026.
Insurance companies and pension plans hold large quantities of bond investments. Sea Insurance Corp. purchased $2,000,000 of 9% bonds of Sheehan, Inc., for 96 on January 1, 2021. These bonds pay
Pueblo, Inc., ended 2021 with 8 million shares of $1 par common stock issued and outstanding. On December 31, 2021, additional paid-in capital was $16 million, and retained earnings totaled $38
Parker Networking Solutions began operations on January 1, 2021, and immediately issued its stock, receiving cash. Parker’s balance sheet at December 31, 2021, reported the following
Specialties, Inc., reported the following statement of stockholders’ equity for the year ended October 31, 2021: RequirementsAnswer these questions about Patterson’s stockholders’ equity
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, 2022, for a total of $67,050. Record the entries for the
The following accounts and related balances of Cardinal Designers, Inc., as of December 31, 2021, are arranged in no particular order: Requirements 1. Prepare Cardinal’s classified
Assume Dotty Cakes, Inc., completed the following transactions during 2021, the company’s 10th year of operations: Requirements 1. Analyze each transaction in terms of its effect on the
Flores Company purchases 900 shares of Sherman Express common stock at the market price of $79.24 on March 23, 2021. (Flores’ investment in Sherman represents less than 5% of the outstanding stock
Madrid Jewelry Company reported the following summarized balance sheet at December 31, 2021: During 2022, Madrid Jewelry completed these transactions that affected stockholders’
Ahuja Specialties, Inc., reported the following statement of stockholders’ equity for the year ended October 31, 2021: Requirements Answer these questions about Ahuja’s stockholders’
Superior Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2022: Requirements1. Identify the different issues of stock that
The following accounts and related balances of Eagle Designers, Inc., as of December 31, 2021, are arranged in no particular order: Requirements1. Prepare Eagle’s classified balance sheet in
Assume Dessert Corner, Inc., completed the following transactions during 2021, the company’s 10th year of operations: Requirements 1. Analyze each transaction in terms of its effect on
Jubilee Jewelry Company reported the following summarized balance sheet at December 31, 2021: During 2022, Jubilee Jewelry completed these transactions that affected stockholders’
Virginia Company included the following items in its financial statements for 2021, the current year (amounts in millions): Requirements1. Use DuPont Analysis to calculate Virginia’s return on
Doorman Corp. has the following stockholders’ equity information: Doorman’s charter authorizes the company to issue 9,000 shares of 8% preferred stock with par value of $120 and 700,000 shares of
Seasonal Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at March 31, 2022: Requirements1. Identify the different issues of stock that
The stockholders’ equity section of the balance sheet for Yarrow Yogurt Company on August 12, 2022, follows: On August 12, 2022, the market price of Yarrow common stock was $18 per share.
Riverside Company reported the following items on its statement of shareholders’ equity for the year ended December 31, 2021 (amounts in thousands of dollars):Requirements1. Determine the December
At December 31, 2021, Creator Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts).Creator’s 2022 transactions includeda.
Huron Manufacturing, Inc., reported the following at December 31, 2021, and December 31, 2022: Huron Manufacturing has paid all preferred dividends only through 2018. Requirement1.
Beluga Software had the following selected account balances at December 31, 2021 (all numbers and amounts are in thousands, except par value per share): Requirements 1. Prepare the
Lakeside Company reported the following items on its statement of shareholders’ equity for the year ended December 31, 2021 (amounts in thousands of dollars):Requirements1. Determine the December
The stockholders’ equity section of the balance sheet for Warren Corporation on August 16, 2022, follows: On August 16, 2022, the market price of Warren common stock was $20 per share. Warren
Bretton Software had the following selected account balances at December 31, 2021 (all numbers and amounts are in thousands, except par value per share): Requirements 1. Prepare the
Ontario Manufacturing, Inc., reported the following at December 31, 2021, and December 31, 2022: Ontario Manufacturing has paid all preferred dividends only through 2018. Requirement1.
To follow is a screenshot of the unformatted statement of stockholders’ equity for The J.M. Smucker Company.List the formatting changes you would make to the statement according to the 10 financial
During 2021, Smokey Corporation earned net income of $5.4 billion and paid off $2.5 billion of long-term notes payable. Smokey raised $1.1 billion by issuing common stock, paid $3.7 billion to
Waketown Marina needs to raise $2.0 million to expand the company. The company is considering issuing either:? $2,000,000 of 6% bonds payable to borrow the money;? 100,000 shares of common stock at
The Princeville Company has debt covenants on its bank loan. During the 15-year term of the loan, Princeville must comply with these covenants: a. Current ratio must be 1.25 or higher.b. Debt
At the end of fiscal year 2021, Hammond Legal Services and Delectable Doughnuts reported these adapted amounts on their balance sheets (all amounts in millions except for par value per
Identify the current liability associated with each of the following operating activities:1. Perform work on a warranty claim2. Pay income taxes3. Purchase supplies4. Pay payroll taxes5. Borrow money
On June 1, 2022, Franklin Company purchased inventory costing $90,000 by signing an 8%, nine-month, shortterm note payable. Franklin will pay the entire note (principal and interest) on the note’s
Alloy Corporation has 25,000 shares of $1.40 preferred stock outstanding in addition to its common stock. The $1.40 designation means that the preferred stockholders receive an annual cash dividend
On January 10, 2022, Mahlon Design Services purchased treasury stock at a cost of $26 million. On July 3, 2022, Mahlon resold some of the treasury stock for $11 million; this resold treasury stock
Toyama Corporation’s 2021 financial statements reported the following information, with 2020 figures shown for comparison (adapted, and in millions):Use the DuPont Model to calculate Toyama’s
On February 5, 2021, Festival Rental Corporation’s board of directors declared a dividend of $0.30, to be paid on March 18, 2021, to the shareholders of record as of the close of business on March
Glenwood Corporation earned net income of $90,000 during the year ended December 31, 2021. On December 15, Glenwood declared the annual cash dividend on its 1% preferred stock (13,000 shares with
Hometown Bancshares has 40,000 shares of $3 par value common stock outstanding. Suppose Hometown declares and distributes a 5% stock dividend when the market value of its stock is $15 per share.1.
The CEO and CFO from Lawrence Hotels, Inc., are reviewing company performance for 2021. The income statement reports a 25% increase in net income over 2020. However, most of the increase resulted
The stockholders’ equity of Bowling Green Uniforms as of December 31, 2021 and 2020, follows: Requirements 1. What is the par value of the common stock?2. How many shares of common stock
Thompson Turf Trimmers, Inc., reported the following financial statements for 2021: Calculate the following investing cash flows; enter all amounts in thousands.a. Acquisitions of plant assets
Elan Corporation accountants have assembled the following data for the year ended June 30, 2021: Prepare the operating activities section of Elan’s statement of cash flows for the year ended
To follow is an example of a worksheet containing the operating cash flow ratios for seven companies over a six-year period.Using the Excel file online in MyLab Accounting, apply the Formatting: Top
Westfall Industries began 2021 with its accounts receivable, inventory, and prepaid expenses totaling $50,000 and its total current liabilities totaling $36,000. At the end of the year, these same
Middleburg Golf Club, Inc., has assembled the following data for the year ended September 30, 2021: Prepare the operating activities section of Middleburg Golf Club’s statement of cash flows
Crater HVAC Systems is preparing its statement of cash flows (indirect method) for the year ended March 31, 2021. To follow, in no particular order, is a list of items that will be used in preparing
Smither Software Corp. has assembled the following data for the years ending December 31, 2021 and 2020.Requirement Prepare Smither’s statement of cash flows using the indirect method to
The 2021 and 2020 comparative balance sheets and 2021 income statement of Queen Supply Corp. follow:Queen Supply had no noncash investing and financing transactions during 2021. During the year,
To follow is an example of a worksheet containing the operating cash flow ratios for five companies over a six-year period. Using the Excel file online in MyLab Accounting, apply the Formatting:
To prepare the statement of cash flows, accountants for Dartmouth Electric Company have summarized 2021 activity in two accounts:Dartmouth Electric’s 2021 income statement and balance sheet data
Tally-Ho Horse Farms, Inc., began 2021 with cash of $170,000. During the year, Tally-Ho earned service revenue of $595,000 and collected $590,000 from customers. Expenses for the year totaled
The comparative balance sheets of Bedford Movie Theater Company at November 30, 2021 and 2020, reported the following: Bedford’s transactions during the year ended November 30, 2021,
To prepare the statement of cash flows, accountants for Ronklin Electric Company have summarized 2021 activity in two accounts:Ronklin Electric’s 2021 income statement and balance sheet data
Fortune Software Corp. has assembled the following data for the years ending December 31, 2021 and 2020: Requirement Prepare Fortune’s statement of cash flows using the indirect method to
The comparative balance sheets of American-Davis Design Studio, Inc., at June 30, 2021 and 2020, and transaction data for fiscal 2021 are as follows:Transaction data for the year ended June 30, 2021,
The 2021 and 2020 comparative balance sheets and 2021 income statement of Mercedes Supply Corp. follow: Mercedes Supply had no noncash investing and financing transactions during 2021. During
Luxe, Inc., reported the following in its financial statements for the year ended May 31, 2021 (in thousands): Requirement Determine the following cash receipts and payments for Luxe during
Delorme Specialties reported the following at December 31, 2021 (in thousands): RequirementDetermine the following items for Delorme Specialties during 2021:a. Gain or loss on the sale of
The 2021 income statement and the 2021 comparative balance sheet of Ghent River Camp, Inc., have just been distributed at a meeting of the camp’s board of directors. The directors raise a
Regan Corporation reported the following amounts on its 2021 comparative income statements: Perform a horizontal analysis of revenues, expenses, and net income—both in dollar amounts and in
The Metro 2021 income statement follows.Use the preceding income statement and the balance sheet from S12-6 to calculate the following:a. Metro’s rate of inventory turnover and days’ inventory
Sokolsky Designs reported the following amounts on its balance sheets at December 31, 2021, 2020, and 2019:Sales and profits are high. Nevertheless, Sokolsky is experiencing a cash shortage. Perform
The annual report of Salem Cars, Inc., for the year ended December 31, 2021, included the following items (in millions): 1. Calculate earnings per share (EPS) and the price-earnings ratio for
To follow is the 2021 income statement of Kurzic Imports, Inc.1. How much gross profit did Kurzic earn on the sale of its products in 2021? How much was income from continuing operations? How much
The following information is for Nature Lodge. What were the dollar amounts of change and the percentage of each change in Nature Lodge’s net working capital during 2021 and 2020? Is this trend
Jalbert Furniture Company has asked you to determine whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2021. To answer this question,
For 2021 and 2020, calculate return on sales, asset turnover, return on assets (ROA), leverage, return on common stockholders’ equity (ROE), gross profit percentage, operating income percentage,
Create a Microsoft Excel worksheet using Office 365. Enter the stock ticker of WMT in a cell and designate that cell as a stock data type. Add fields to the worksheet to answer the following
Palace Loan Company’s balance sheet at December 31, 2021, reports the following: During 2021, Palace Loan earned net income of $6,300,000. Calculate Palace Loan’s earnings per common share
Evaluate the common stock of Carver Distributing Company as an investment. Specifically, use the two common stock ratios to determine whether the common stock became more or less attractive during
The Calloway Book Company’s accounting records include the following for 2021 (in thousands): Requirements 1. Prepare Calloway Book Company’s single-step income statement for the year
The following information is for Leary Lodge. What were the dollar amount of change and the percentage of each change in Leary Lodge’s net working capital during 2021 and 2020? Is this trend
Evansville Furniture Company has asked you to determine whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2021. To answer this
For 2021 and 2020, calculate return on sales, asset turnover, return on assets (ROA), leverage, return on common stockholders’ equity (ROE), gross profit percentage, operating income percentage,
Altar Loan Company’s balance sheet at December 31, 2021, reports the following: During 2021, Altar Loan earned net income of $6,200,000. Calculate Altar Loan’s earnings per common share
The Hooper Book Company’s accounting records include the following for 2021 (in thousands):Requirements1. Prepare Hooper Book Company’s single-step income statement for the year ended December
Evaluate the common stock of Tristan Distributing Company as an investment. Specifically, use the two common stock ratios to determine whether the common stock became more or less attractive during
Jamison Sports Authority purchased inventory costing $25,000 by signing a 12%, six-month, short-term note payable. The purchase occurred on January 1, 2021. Jamison will pay the entire note
North Boulder USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles, whichever comes first. Suppose North Boulder USA can expect warranty costs during the
EnviroFriend Structures, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,780 million. At December 31, 2021 and 2020, the company had, respectively, $656
Fitzgerald Company pays its employees every other Friday. December 31, 2020, was a Sunday. On Friday, January 5, 2021, Fitzgerald paid wages of $112,000, which covered the 14-day period from December
Wicker Sales, Inc.’s, comparative income statements and balance sheets show the following selected information for 2020 and 2021:Requirements1. Calculate the company’s accounts payable turnover
On August 1, 2022, The Shoppes at Mill Lake, Inc., purchased inventory costing $40,000 by signing a 6%, six-month, short-term note payable. The company will pay the entire note (principal and

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