Questions and Answers of Financial Accounting Information For Decisions

On October 10, the stockholders’ equity section of Sherman Systems appears as follows.Common stock—$10 par value, 72,000 shares authorized, issued, and outstanding ......................... $
Refer to the 2018 balance sheet for Google in Appendix A. What is the par value per share of its preferred stock? Suggest a rationale for the amount of par value it assigned.
Refer to Apple’s fiscal 2018 balance sheet in Appendix A. How many shares of common stock are authorized? How many shares of common stock are issued and outstanding?
1. Prepare the journal entry to record Tamas Company’s issuance of 5,000 shares of $100 par value, 7% cumulative preferred stock for $102 cash per share.2. Assuming the facts in part 1, if Tamas
Indicate whether each of the following statements regarding dividends is true or false.1. Cash and stock dividends reduce retained earnings.2. Dividends payable is recorded at the time a cash
For each dividend and stock split issued, determine the impact—increase, decrease, or no effect—on total assets, total liabilities, and total equity. Total Assets Total Llabilities Total Equity
Access the February 22, 2019, filing of the 2018 calendar-year 10-K report of McDonald’s (ticker: MCD) from SEC.gov. Required 1. Review McDonald’s balance sheet and identify how many
Use the following comparative figures for Apple and Google.Required1. Compute the basic EPS for each company using these data.2. Compute the dividend yield for each company using these data.3.
Balthus Corp. reports the following components of stockholders’ equity at December 31, 2019.Common stock—$1 par value, 320,000 shares authorized,200,000 shares issued and outstanding . . . . . .
Kohler Corporation reports the following components of stockholders’ equity at December 31, 2019.Common stock—$10 par value, 100,000 shares authorized,40,000 shares issued and outstanding . . .
Identify which of the following statements are true for the corporate form of organization.1. Ownership rights cannot be easily transferred.2. Owners have unlimited liability for corporate debts.3.
What are organization expenses? Provide examples.
Use Apple’s financial statements in Appendix A to answer the following.1. How many shares of Apple common stock are issued and outstanding at (a) September 29, 2018, (b) September 30,
Santana Rey created Business Solutions on October 1, 2020. The company has been successful, and Santana plans to expand her business. She believes that an additional $86,000 is needed and is
Quatro Co. issues bonds dated January 1, 2020, with a par value of $400,000. The bonds’ annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature
Stanford issues bonds dated January 1, 2020, with a par value of $500,000. The bonds’ annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in
Select the description that best fits each term or phrase.A. Records and tracks the bondholders’ names.B. Is unsecured; backed only by the issuer’s credit standing.C. Has varying maturity dates
Refer to the statements for Google in Appendix A. For the year ended December 31, 2018, what was its debt-to-equity ratio? What does this ratio tell us?
Refer to QS 10-14 and separately analyze transactions 1 and 2, involving issuance of the note and its first annual payment, by showing their effects on the accounting equation—specifically,
Refer to the statement of cash flows for Samsung in Appendix A. For the year ended December 31, 2018, what was the amount for repayment of long-term borrowings and debentures?
On January 1, 2020, Eagle Company borrows $100,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $29,523, consisting of accrued interest and principal on
In each separate situation, show how bonds payable is reported in the long-term liabilities section of the December 31 balance sheet.1. Bonds payable with a par value of $10,000 and a premium on
On January 1, 2020, Shay Company issues $700,000 of 10%, 15-year bonds. The bonds sell for $684,250. Six years later, on January 1, 2026, Shay retires these bonds by buying them on the open market
Valdez issues $450,000 of 13%, four-year bonds dated January 1, 2020, that pay interest semiannually on June 30 and December 31. They are issued at $493,608 when the market rate is 10%.Required1.
Ike issues $180,000 of 11%, three-year bonds dated January 1, 2020, that pay interest semiannually on June 30 and December 31. They are issued at $184,566 when the market rate is 10%.Required1.
Snap Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $100,000 and semiannual interest payments. Use the following bond amortization table and prepare journal
Quatro Co. issues bonds dated January 1, 2020, with a par value of $400,000. The bonds’ annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature
Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments.On the issue date, the annual market rate for these bonds is 10%, which implies a selling price
Wookie Company issues 10%, five-year bonds, on January 1 of this year, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal
Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest payments.On the issue date, the annual market rate for these bonds is 8%, which implies a selling price
Duval Co. issues four-year bonds with a $100,000 par value on January 1, 2020, at a price of $95,952. The annual contract rate is 7%, and interest is paid semiannually on June 30 and December
Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments.On the issue date, the annual market rate for these bonds is 10%, which implies a selling price
Dobbs Company issues 5%, two-year bonds, on December 31, 2020, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal entries to
Allegiant issues 6%, 20-year bonds with a par value of $2,000,000 and semiannual interest payments. In each separate situation, determine whether the bond is issued at par value, at a discount, or at
On October 1, 2020, Gordon borrows $150,000 cash from a bank by signing a three-year installment note bearing 10% interest. The note requires equal payments of $60,316 each year on September
On November 1, 2020, Norwood borrows $200,000 cash from a bank by signing a five-year installment note bearing 8% interest. The note requires equal payments of $50,091 each year on October
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal
Break into teams and complete the following requirements related to effective interest amortization for a premium bond.1. Each team member is to independently prepare a blank table with proper
Gomez issues $240,000 of 6%, 15-year bonds dated January 1, 2020, that pay interest semiannually on June 30 and December 31. They are issued at $198,494 when the market rate is 8%.Required1. Prepare
Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2020, that pay interest semiannually on June 30 and December 31. They are issued at $292,181 when the market rate is 8%.Required1.
Tano Company issues bonds with a par value of $180,000 on January 1, 2020. The bonds’ annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in
Madrid Company plans to issue 8% bonds with a par value of $4,000,000. The company sells $3,600,000 of the bonds at par on January 1. The remaining $400,000 sells at par on July 1. The bonds pay
Selected results from Samsung, Apple, and Google follow.Required1. Compute Samsung’s debt-to-equity ratio for the current year and the prior year.2. Is Samsung’s financing structure more risky or
Ripkin Company issues 9%, five-year bonds dated January 1, 2020, with a $320,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $332,988. Their annual
Ellis Company issues 6.5%, five-year bonds dated January 1, 2020, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market
Separately analyze transactions a and b from QS 10-2 by showing their effects on the accounting equation specifically, identify the accounts and amounts (including + or −) for each transaction.QS
Key figures for Apple and Google follow.Required1. Compute the debt-to-equity ratios for Apple and Google for both the current year and the prior year.2. Use the ratios from part 1 to determine which
Brussels Enterprises issues bonds at par dated January 1, 2020, that have a $3,400,000 par value, mature in four years, and pay 9% interest semiannually on June 30 and December 31.1. Record the entry
Dunphy Company issued $10,000 of 6%, 10-year bonds at par value on January 1. Interest is paid semiannually each June 30 and December 31. Prepare the entries for (a) the issuance of the bonds and (b)
Use Apple’s financial statements in Appendix A to answer the following.1. Identify Apple’s long-term debt as reported on its balance sheet at (a) September 29, 2018, and(b) September 30,
Santana Rey has consulted with her local banker and is considering financing an expansion of her business by obtaining a long-term bank loan. Selected account balances at March 31, 2021, for Business
Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2020, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,456,448.Required1. Prepare the
Park Company reports interest expense of $145,000 and income before interest expense and income taxes of $1,885,000. (1) Compute its times interest earned. (2) Park’s competitor’s times
Prepare adjusting entries at December 31 for Maxum Company’s year-end financial statements for each of the following separate transactions.1. Employees earn vacation pay at a rate of one day per
Selected accounts from Russel Co.’s adjusted trial balance for the year ended December 31 follow. Prepare the liabilities section of its classified balance sheet. FICA-Social Security taxes
Refer to Samsung’s balance sheet in Appendix A. List Samsung’s current liabilities as of December 31, 2018.
Huprey Co. is the defendant in the following legal claims. For each of the following separate claims, indicate whether Huprey should (a) record a liability, (b) disclose in notes, or (c) have no
Analyze each of the following transactions from Exercise 9-12: (a) The copier’s sale; (b) The adjustment to recognize the warranty expense on December 31 of Year 1; (c) The repairs
Hitzu Co. sold a copier (that costs $4,800) for $6,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% of dollar sales. It records
Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $132,900 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $132,900 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA
At the end of the first pay period of the year, Sofia earned $4,000 of salary. Withholdings from Sofia’s salary include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the
On November 7, Mura Company borrows $160,000 cash by signing a 90-day, 8%, $160,000 note payable.(1) Compute the accrued interest payable on December 31; (2) Prepare the journal entry to record
On March 1, LGE asks to extend its past-due $1,200 account payable to Tyson. Tyson agrees to accept $200 cash and a 180-day, 8%, $1,000 note payable to replace the account payable. (1) Prepare
Review the chapter’s opening feature about Beto Perez and Zumba. Assume the company is considering expanding to Europe and that the current abbreviated income statement appears as follows.
Keesha Co. borrows $200,000 cash on November 1 of the current year by signing a 90-day, 9%, $200,000 note.1. On what date does this note mature?2. How much interest expense is recorded in the current
What is the combined amount (in percent) of the employee and employer Social Security tax rate? (Assume wages do not exceed $132,900 per year.)
Access the February 22, 2019, filing of the December 31, 2018, annual 10-K report of McDonald’s Corporation (ticker: MCD), which is available from SEC.gov.Required1. Identify the current
Comparative figures for Samsung, Apple, and Google follow.Required1. Compute the times interest earned ratio for the most recent two years for Samsung using the data shown.2. Is the change in
The liabilities of Organic Foods are made up of $60,000 in notes payable as of its December 31 year-end. For those notes payable, $3,000 is due within the next year. Prepare the liabilities section
Key figures for Apple and Google follow.Required1. Compute times interest earned for the three years’ data shown for each company.2. In the current year, and using times interest earned, which
Use the table below and Apple’s financial statements in Appendix A to answer the following.1. Compute times interest earned for each of the three years shown.2. Is Apple in a good or bad position
Lok Co. reports net sales of $5,856,480 for Year 2 and $8,679,690 for Year 3. End-of-year balances for total assets are Year 1, $1,686,000; Year 2, $1,800,000; and Year 3, $1,982,000. (a)
Selected accounts from Gregor Co.’s adjusted trial balance for the year ended December 31 follow. Prepare a classified balance sheet. Common stock.. $40,000 Accounts payable... $ 2,000 Retained
A company pays $760,000 cash to acquire an iron mine on January 1. At that same time, it incurs additional costs of $60,000 cash to access the mine, which is estimated to hold 100,000 tons of iron.
Refer to Samsung’s December 31, 2018, balance sheet in Appendix A. What longterm assets discussed in this chapter are reported by the company?
Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500. Both the ore and machinery will have no salvage value
Refer to Samsung’s balance sheet in Appendix A. What does it title its plant assets? What is the book value of its plant assets at December 31, 2018?
Rayya Co. purchases a machine for $105,000 on January 1, 2020. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on
The asset accounts from Ridley Co.’s adjusted trial balance for its December 31 year-end follow. Prepare the assets section of its classified balance sheet. Copyrights $ 5,000 Trademarks $20,000
Refer to Google’s recent balance sheet in Appendix A. What is the book value of its total net property and equipment assets at December 31, 2018?
Analyze each of the following transactions by showing its effects on the accounting equation— specifically, identify the accounts and amounts (including + or −) for each transaction.Jan. 1
A&J Co. incurred the following expenses related to patented drugs.1. Indicate costs that are reported as research and development expenses on the income statement.2. Indicate costs that are
Baine Company purchased Vera Company at a price of $500,000. The fair value of the net assets purchased equals $420,000. Compute the amount of goodwill that Baine records at the purchase date.
Robotix Co. purchases a patent for $20,000 on January 1. The patent is good for 18 years, after which anyone can use the patent technology. However, Robotix plans to sell products using that patent
Apex Fitness Club uses straight-line depreciation for a machine costing $23,860, with an estimated fouryear life and a $2,400 salvage value. At the beginning of the third year, Apex determines that
On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense at December 31 for both the
Using the information in QS 6-12, prepare the adjusting journal entries that Organic Food Co. must record as a result of preparing the bank reconciliation.QS 6-12Organic Food Co.’s Cash account
1. Classify the following as either a revenue expenditure or a capital expenditure.a. Paid $40,000 cash to replace a motor on equipment that extends its useful life by four years.b. Paid $200 cash
Equipment has a book value of $16,000 and a fair value of $14,750. The decline in value meets the impairment test. Prepare the entry to record this $1,250 impairment.
Identify the following as intangible assets, natural resources, or some other asset.a. Oil wellb. Trademarkc. Leaseholdd. Gold minee. Buildingf. Copyrightg. Franchiseh. Coal minei. Salt mine
On April 1, Cyclone Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000. Compute depreciation expense at December 31 for both the
Onslow Co. purchased a used machine for $178,000 cash on January 2. On January 3, Onslow paid $2,840 to wire electricity to the machine. Onslow paid an additional $1,160 on January 4 to secure the
Review the chapter’s opening feature involving Elon Musk and SpaceX. Assume that the company currently has net sales of $8,000,000 and that it is planning an expansion that will increase net sales
A building is acquired on January 1 at a cost of $830,000 with an estimated useful life of eight years and salvage value of $75,000. Compute depreciation expense for the first three years using the
Each team member is to become an expert on one depreciation method to facilitate teammates’ understanding of that method. Follow these procedures:a. Each team member is to select an area of
Access the Yahoo! (renamed as Altaba, ticker: AABA) 10-K report for the year ended December 31, 2016, filed on March 1, 2017, at SEC.gov. Required 1. What amount of goodwill is reported on
On January 1, ProTech Co. pays a lump-sum amount of $1,550,000 for land, Building A, Building B, and Land Improvements B. Building A has no value and will be demolished. Building B will be an office
On January 1, Mitzu Co. pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office
Listed below are costs (or discounts) to purchase or construct new plant assets. (1) Indicate whether the costs should be expensed or capitalized (meaning they are included in the cost of the plant

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