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financial accounting
Financial Accounting 12th edition C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr. - Solutions
In a DuPont analysis, what are the components of return on assets?a. Net Profit Margin Ratio and Debt Ratiob. Net Profit Margin Ratio and Leverage Ratioc. Net Profit Margin Ratio and Asset Turnover Ratiod. Asset Turnover Ratio and Leverage Ratio
Amir Company’s net income and net sales are $18,000 and $1,100,000, respectively, and average total assets are $100,000. What is Amir’s return on assets?a. 20.0%b. 18.0%c. 3.7%d. 7.0%
Which of the following statements is not true about a 3-for-1 stock split?a. Total stockholders’ equity increases.b. A stockholder with 10 shares before the split owns 30 shares after the split.c. Retained Earnings remains the same.d. The market price of each share of stock will decrease.e. Par
A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal toa. The market value of the shares to be issued.b. The par value of the shares to be issued.c. The book value of the shares to be issued.d. The excess of the market price over the original issue price of the
Assume the same facts as in Q10-69. What is the amount of dividends per share on common stock?a. $8.25b. $4.25c. $4.33d. $0.33e. None of these
A corporation has 100,000 shares of 4% preferred stock outstanding. Also, there are 100,000 shares of common stock outstanding. Par value for each is $100. If a $825,000 dividend is paid, how much goes to the preferred stockholders?a. Noneb. $400,000c. $412,500d. $33,000e. $825,000
Marvin’s Foods has outstanding 400 shares of 2% preferred stock, $100 par value; and 1,500 shares of common stock, $15 par value. Marvin’s declares dividends of $13,800. Which of the following is the correct entry? A1 Dividends Expense Cash 13,800 a. 13,800 3 b. Retained Earnings 13,800
Stockholders are eligible for a dividend if they own the stock on the date ofa. Declaration.b. Record.c. Payment.d. Issuance.
When treasury stock is sold for less than its cost, the entry should include a debit toa. Gain on Sale of Treasury Stock.b. Loss on Sale of Treasury Stock.c. Retained Earnings.d. Paid-in Capital in Excess of Par.
Quill Corporation paid $28 per share to purchase 900 shares of its common stock as treasury stock. The stock was originally issued at $12 per share. Which of the following would be the journal entry that Quill would make to record the purchase of the treasury stock? A1 A. Treasury Stock Cash 25,200
Sportplace’s net income for the period is $119,600 and its average common stockholders’ equity is $699,415. Sportplace’s return on common stockholders’ equity is closest toa. 17.1%.b. 17.2%.c. 18.4%.d. 17.3%.These account balances at December 31 relate to Sportplace, Inc.: $ 51,700 Paid-in
What is total stockholders’ equity for Sportplace, Inc.?a. $709,900b. $704,200c. $638,000d. $715,600e. None of the aboveThese account balances at December 31 relate to Sportplace, Inc.: $ 51,700 Paid-in Capital in Excess of Par-Common.. Preferred Stock, 10%, $100 Par.. Retained Earnings Notes
What is total paid-in capital for Sportplace? (Assume that treasury stock does not reduce total paid-in capital.)a. $632,300b. $709,900c. $643,700d. $638,000e. None of the aboveThese account balances at December 31 relate to Sportplace, Inc.: $ 51,700 Paid-in Capital in Excess of Par-Common..
Which of the following classifications represents the most shares of common stock?a. Unissued sharesb. Issued sharesc. Treasury sharesd. Outstanding sharese. Authorized shares
Preferred stock is least likely to have which of the following characteristics?a. Preference as to assets on liquidation of the corporationb. The right of the holder to convert the shares to common stockc. Preference as to votingd. Preference as to dividends
Spirit World, Inc., issued 250,000 shares of no-par common stock for $5 per share. The journal entry to record the issuance would be: A1 A. Cash Common Stock Gain on the Sale of Stock 1,250,000 a. 250,000 1,000,000 2 3 b. Cash 250,000 Common Stock 250,000 Cash Common Stock 1,250,000 C. 1,250,000 9.
The basic form of capital stock isa. Par value stock.b. The corporate charter.c. A share of preferred stock.d. A share of common stock.
Which of the following is a characteristic of a corporation?a. No income taxb. Limited liability of stockholdersc. Mutual agencyd. Both b and c
Riverside Company reported the following items on its statement of shareholders’ equity for the year ended December 31, 2018 (amounts in thousands of dollars):Requirements1. Determine the December 31, 2018, balances in Riverside’s shareholders’ equity accounts and total shareholders’
Use the Virginia data in E10-54B to show how the company reported cash flows from financing activities during 2018 (the current year).Data from E10-45BAllenton Marketing Corporation reported the following stockholders’ equity at December 31 (adapted and in millions):Common
Virginia Company included the following items in its financial statements for 2018, the current year (amounts in millions):Requirements1. Use DuPont Analysis to calculate Virginia’s return on assets and return on common equity during 2018 (the current year). The company has no preferred stock
Bondwell Financial Services is considering two plans for raising $500,000 to expand operations. Plan A is to borrow at 6%, and plan B is to issue 100,000 shares of common stock at $5.00 per share. Before any new financing, Bondwell has net income of $200,000 and 100,000 shares of common stock
Data from the financial statements of Glowing Candle Company included the following:Average total assets ................................................................ $60,000Average common stockholders’ equity ................................... 25,000Net sales
Identify the effects—both the direction and the dollar amount—of these transactions on the total stockholders’ equity of Cadberry Corporation. Each transaction is independent.a. Declaration of cash dividends of $75 million.b. Payment of the cash dividend in (a).c. A 25% stock dividend. Before
The stockholders’ equity section of the balance sheet for Yarrow Yogurt Company on August 12, 2019, follows:On August 12, 2019, the market price of Yarrow common stock was $18 per share. Yarrow declared and distributed a 10% stock dividend on this date.Requirements1. Journalize the declaration
Huron Manufacturing, Inc., reported the following at December 31, 2018, and December 31, 2019:Huron Manufacturing has paid all preferred dividends only through 2015.Requirement1. Calculate the total amounts of dividends to both preferred and common stockholders for 2018 and 2019 if total dividends
Optical Products Company reported the following stockholders’ equity on its balance sheet:Requirements1. What caused Optical’s preferred stock to decrease during 2019? Cite all possible causes.2. What caused the company’s common stock to increase during 2019? Identify all possible causes.3.
Use the Creator Corporation data in E10-46B to prepare the stockholders’ equity section of the company’s balance sheet at December 31, 2019.Data from E10-46BAt December 31, 2018, Creator Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions,
At December 31, 2018, Creator Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts).Common stock $2.00 par value per share,23 million shares issued............................. $ 46Paid-in capital in excess of par value
Allenton Marketing Corporation reported the following stockholders’ equity at December 31 (adapted and in millions):Common stock........................................ $ 243Additional paid-in capital.......................... 231Retained earnings.................................. 2,149Treasury
Beluga Software had the following selected account balances at December 31, 2018 (all numbers and amounts are in thousands, except par value per share):Requirements1. Prepare the stockholders’ equity section of Beluga Software’s balance sheet (in thousands).2. How can Beluga have a larger
The financial statements of Noble Employment Services, Inc., reported the following accounts (adapted, with dollar amounts in thousands except for par value):Net income has already been closed to Retained Earnings. Prepare the stockholders’ equity section of Noble’s balance sheet. Paid-in
Coastal Publishing was recently organized as a corporation. The company issued common stock to an attorney who provided legal services worth $25,000 to help with the incorporation. Coastal also issued common stock to an inventor in exchange for her patent with a market value of $75,000. In
Caribbean Imports is authorized to issue 16,000 shares of common stock. During a two-month period, Caribbean completed these stock transactions:Apr 23 Issued 3,200 shares of $2.00 par common stock for cash of $16.00 per share.May 12 Received inventory with a market value of $11,000 and equipment
Lakeside Company reported the following items on its statement of shareholders’ equity for the year ended December 31, 2018 (amounts in thousands of dollars):Requirements1. Determine the December 31, 2018, balances in Lakeside’s shareholders’ equity accounts and total shareholders’
Use the Carolina Company data in E10-37A to show how the company reported cash flows from financing activities during 2018 (the current year).Data from E10-37ACarolina Company included the following items in its financial statements for 2018, the current year (amounts in millions): Payment of
Carolina Company included the following items in its financial statements for 2018, the current year (amounts in millions):Requirements1. Use DuPont Analysis to calculate Carolina’s return on assets and return on common equity during 2018 (the current year). The company has no preferred stock
United Financial Services is considering two plans for raising $800,000 to expand operations. Plan A is to borrow at 10%, and plan B is to issue 200,000 shares of common stock at $4.00 per share.Before any new financing, United has net income of $500,000 and 200,000 shares of common stock
Data from the financial statements of Eclectic Candle Company included the following:Average total assets ...................................................................... $ 50,000Average common stockholders’ equity ......................................... 20,000Net sales
Identify the effects—both the direction and the dollar amount—of these transactions on the total stockholders’ equity of Niles Corporation. Each transaction is independent.a. Declaration of cash dividends of $85 million.b. Payment of the cash dividend in (a).c. A 5% stock dividend. Before the
The stockholders’ equity section of the balance sheet for Warren Corporation on August 16, 2019, follows:On August 16, 2019, the market price of Warren common stock was $20 per share. Warren declared and distributed a 10% stock dividend on this date.Requirements1. Journalize the declaration and
Ontario Manufacturing, Inc., reported the following at December 31, 2018, and December 31, 2019:Ontario Manufacturing has paid all preferred dividends only through 2015.RequirementCalculate the total amounts of dividends to both preferred and common stockholders for 2018 and 2019 if total dividends
Omega Products Company reported the following stockholders’ equity on its balance sheet:Requirements1. What caused Omega’s preferred stock to decrease during 2019? Cite all possible causes.2. What caused the company’s common stock to increase during 2019? Identify all possible causes.3. How
Use the Atlantic Corporation data in E10-29A to prepare the stockholders’ equity section of the company’s balance sheet at December 31, 2019.Data from E10-29AAt December 31, 2018, Atlantic Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions,
At December 31, 2018, Atlantic Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts).Common stock $3.00 par value per share,21 million shares issued................................ $ 63Paid-in capital in excess of par value
Wishtown Marketing Corporation reported the following stockholders’ equity at December 31 (adapted and in millions):Common stock........................................ $ 281Additional paid-in capital......................... 245Retained earnings.................................. 2,199Treasury
Bretton Software had the following selected account balances at December 31, 2018 (all numbers and amounts are in thousands, except par value per share):Requirements1. Prepare the stockholders’ equity section of Bretton’s balance sheet (in thousands).2. How can Bretton have a larger balance
The financial statements of Mountainview Employment Services, Inc., reported the following accounts (adapted, with dollar amounts in thousands except for par value):Net income has already been closed to Retained Earnings. Prepare the stockholders’ equity section of Mountainview’s balance
Excursion Publishing was recently organized as a corporation. The company issued common stock to an attorney who provided legal services worth $24,000 to help with the incorporation. Excursion also issued common stock to an inventor in exchange for her patent with a market value of $80,000. In
Pickering Stores is authorized to issue 11,000 shares of common stock. During a two-month period, Pickering completed these stock transactions:Jan 23 Issued 1,000 shares of $6.00 par common stock for cash of $14.00 per share.Feb 12 Received inventory with a market value of $11,000 and equipment
Complete each of the following statements with one of the terms listed here.a. The right to maintain one’s proportionate ownership in the corporation is the right of ___________.b. The right to receive a proportionate share of any assets remaining after the corporation goes out of business, sells
The statement of stockholders’ equity for Bailey Corporation follows.Use Bailey Corporation’s statement to answer these questions:1. How much cash did the issuance of common stock bring in during 2018?2. What was the effect of the stock dividends on Bailey’s retained earnings? On total
Use the following statement of stockholders’ equity to answer the following questions about Flannery Corporation:1. How much cash did the issuance of common stock bring in during 2018?2. How much in dividends did Flannery declare during 2018?3. What was the effect of the dividends on Flannery’s
During 2018, 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 purchase treasury stock, and paid cash dividends of $1.3 billion. Report Smokey’s cash flows from
Zanzibar Corporation is conducting a special meeting of its board of directors to address some concerns raised by the stockholders. Stockholders have submitted the following questions. Answer each question.1. What are the differences between common stock and preferred stock?2. Suzanne Gibson, a
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; or■ 100,000 shares of common stock at $20 per share.Before any new financing, Waketown expects to earn net income of $500,000, and
Toyama Corporation’s 2018 financial statements reported the following information, with 2017 figures shown for comparison (adapted, and in millions):Use the DuPont model to calculate Toyama’s return on assets and return on common equity for 2018. Evaluate the rates of return as strong or weak.
Give the DuPont model formula for computing (a) rate of return on total assets (ROA) and (b) rate of return on common stockholders’ equity (ROE). Then answer these questions about the rate-of-return computations.1. Explain the meaning of the component driver ratios in the computation of ROA.2.
Petrov Gold, Inc., has the following stockholders’ equity:Preferred stock, 7%, $8 par,33,000 shares authorized and issued................................................... $ 264,000Common stock, $1 par, 100,000 shares authorized,62,000 shares issued
Refer to the data in S10-13. Using only year-end figures rather than averages, calculate the following for Ridgeline:a. Net incomeb. Total liabilitiesc. Total assets (use the accounting equation)d. Net profit margin ratioe. Asset turnoverf. Leverage ratiog. Return on equityWhat additional
The financial statements of Ridgeline Employment Services, Inc., reported the following accounts:Prepare the stockholders’ equity section of Ridgeline’s balance sheet. Net income has already been closed to Retained Earnings. Paid-in capital in excess of par. Notes payable (short-term).. Common
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. Journalize Hometown’s declaration and distribution of the stock dividend on May 11. An explanation
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 of $1.40 per share. In 2018, Alloy declares an annual dividend of $500,000. The allocation to
Glenmore Corporation earned net income of $90,000 during the year ended December 31, 2018. On December 15, Glenwood declared the annual cash dividend on its 1% preferred stock (13,000 shares with total par value of $130,000) and a $0.45 per share cash dividend on its common stock (65,000 shares
On February 5, 2018, Festival Rental Corporation’s board of directors declared a dividend of $0.30, to be paid on March 18, 2018, to the shareholders of record as of the close of business on March 9, 2018. Festival has 5,000,000 shares of $0.01 par-value common stock authorized with 1,600,000
Krugman Exports, Inc., is located in Clancy, New Mexico. The company does business with specialty stores such as Neiman Marcus. Krugman’s recent success has made the company a prime target for a takeover. The investment group Creston is attempting to buy 52% of Krugman’s outstanding stock
On January 10, 2019, Mahlon Design Services purchased treasury stock at a cost of $26 million. On July 3, 2019, Mahlon resold some of the treasury stock for $11 million; this resold treasury stock had cost the company $4 million. Record the purchase and resale of Mahlon’s treasury stock. Overall,
This short exercise demonstrates the similarity and the difference between two ways to acquire plant assets.Case A – Issue stock and buy the assets in separate transactions:Wolford Company issued 12,000 shares of its $35 par common stock for cash of $950,000. In a separate transaction, Wolford
Attorney Kristen Maloney invoiced Dunn for $20,400 and has agreed to accept 1,500 shares of its $0.01 par-value common stock in full payment for this invoice. Dunn issued the common stock to Attorney Maloney on January 29. Record the stock-issuance transaction for Dunn.
At the end of fiscal year 2018, Hammond Legal Services and Delectable Doughnuts reported these adapted amounts on their balance sheets (all amounts in millions except for par value per share):Assume each company issued its stock in a single transaction. Journalize each company’s issuance of its
Saltwell Industries received $11,500,000 for the issuance of its stock on May 14. The par value of the Saltwell stock was only $11,500. Was the excess amount of $11,488,500 a profit to Saltwell?If not, what was it? Suppose the par value of the Saltwell stock had been $2 per share, $4 per share,
Retrieve the 2016 Under Armour financial statements at www.sec.gov by clicking on Filings and then searching for “Under Armour” under Company Filings. When you see the list of filings for the company, select the Form 10-K for 2016. Be sure to retrieve the 2016 financial statements, not
Refer to Apple Inc.’s consolidated financial statements in Appendix A and online in the filings section of www.sec.gov.Requirements1. Examine Note 5—Income Taxes—in the Notes to Consolidated Financial Statements. Income tax provision is another title for income tax expense. What was Apple’s
In 2002, Enron Corporation filed for Chapter 11 bankruptcy protection, shocking the business community: How could a company so large and successful go bankrupt? This case explores the causes and the effects of Enron’s bankruptcy.At December 31, 2000, and for the four years ended on that date,
Near the end of 2016, The Cheesecake Factory entered into a new loan agreement with its creditors. This new four-year agreement provided loan commitments totaling up to $200 million. The commitments enable The Cheesecake Factory to borrow funds as needed at specified rates and terms. As of January
The Juice Company reported the following comparative information at December 31, 2018, and December 31, 2017 (amounts in millions and adapted):Requirements1. Calculate the following ratios for 2018 and 2017:a. Current ratiob. Debt ratio2. During 2018, The Juice Company issued $1,640 million of
The top management of Palermo Marketing Services examines the following company accounting records at August 29, immediately before the end of the company’s year, August 31:Total current assets ..................... $ 324,500Noncurrent assets........................ 1,086,000
The accounting records of Brigham Foods, Inc., include the following items at December 31, 2018:Requirements1. Show how each relevant item would be reported on the Brigham Foods classified balance sheet. Include headings and totals for current liabilities and long-term liabilities.2. Answer the
On December 31, 2018, Herndon Corporation issues 6%, 10-year convertible bonds payable with a face value of $1,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 7%. Herndon amortizes bond discounts using the effective-interest method.Requirements1. Use
The notes to the Alliance Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):Alliance amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31.Requirements1. Assume the market interest rate is 7% on
On February 28, 2018, Shark Corp. issued 10%, 10-year bonds payable with a face value of $1,500,000. The bonds pay interest on February 28 and August 31. The company amortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Shark Corp. issues its
The board of directors of Mailroom Plus authorized the issue of $8,000,000 of 6%, 10-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2018, at par.Requirements1. Journalize the following transactions:a. Issuance of half of the bonds on
The accounting records of Burgess Foods, Inc., include the following items at December 31, 2018:Requirements1. Show how each relevant item would be reported on the Burgess Foods classified balance sheet. Include headings and totals for current liabilities and long-term liabilities.2. Answer the
On December 31, 2018, Mainland Corporation issues 6%, 10-year convertible bonds payable with a face value of $4,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 8%. Mainland amortizes bond discounts using the effective-interest method.Requirements1.
The notes to the Thorson Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):Thorson amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31.Requirements1. Assume the market interest rate is 6% on
On February 28, 2018, Dolphin Corp. issued 10%, 20-year bonds payable with a face value of $2,100,000. The bonds pay interest on February 28 and August 31. The company amortizes bond discount using the straight-line method.Requirements1. If the market interest rate is 9% when Dolphin Corp. issues
The board of directors of Canterbury Plus authorized the issue of $9,000,000 of 7%, 15-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2018, at par.Requirements1. Journalize the following transactions:a. Issuance of half of the bonds on
Apollo Corporation issued $300,000, five-year bonds at 98 on January 1, 2016. On December 31, 2020, the bonds matured. The payment of the bonds at maturity would be reported on the statement of cash flows as a cash outflow ofa. $294,000 in the financing activities section.b. $294,000 in the
The leverage ratio is equal to average total __________ divided by average _________.a. Long-term debt; common stockholders’ equityb. Assets; common stockholders’ equityc. Debt; total assetsd. Debt; common stockholders’ equity
Cases Unlimited reported operating income of $780,000, interest expense of $120,000, and net income of $575,000. The weighted-average number of shares of common stock outstanding during the year was 100,000 shares. What is the times-interest-earned ratio? (Round your final answer to two decimal
Which of the following items is most likely a short-term liability?a. Deferred income taxesb. Finance lease covering 30-year termc. Bonds payabled. Accounts payable
Corporate bonds that can be exchanged for shares of the corporation’s common stock if certain conditions are met are calleda. Callable bonds.b. Equity bonds.c. Convertible bonds.d. Exchangeable bonds.
Josselle Corporation retires its bonds at 106 on January 1, after the payment of interest. The face value of the bonds is $750,000. The carrying value of the bonds at retirement is $775,600. The entry to record the retirement will include aa. Debit of $19,400 to Premium on Bonds Payable.b. Credit
On January 1, 2020, Fergus Corporation issued $800,000, 10%, 5-year bonds. The bond interest is payable on January 1 and July 1. The bonds sold for $864,887. The market rate of interest when the bonds were issued was 8%. Under the effective-interest method, the interest expense for the six months
Maridell’s Fashions has a debt that has been properly reported as a long-term liability up to the present year (2018). Some of this debt comes due in 2018. If Maridell’s Fashions continues to report the current position as a long-term liability, the effect will be toa. Understate the debt
Using the facts in the preceding question, Mcdonaugh’s entry to record the interest expense on July 1, 2019, will include aa. Debit to Premium on Bonds Payable.b. Credit to Discount on Bonds Payable.c. Debit to Bonds Payable.d. Credit to Interest Expense.
Mcdonaugh Corporation issued $250,000 of 5%, 10-year bonds payable on January 1, 2019. The market interest rate when the bonds were issued was 8%. Interest is paid semiannually on January 1 and July 1. The first interest payment is July 1, 2019. Using the effective-interest amortization method, how
The journal entry on the maturity date to record the retirement of bonds with a face value of $2,500,000 that were issued at a $90,000 discount includesa. A debit to Discount on Bonds Payable for $90,000.b. A credit to Cash for $2,590,000.c. A debit to Bonds Payable for $2,500,000.d. All of the
Cheyenne Company uses the straight-line amortization method. The amount of interest expense for each year will bea. $64,955.b. $58,955.c. $56,000.d. $19,815.e. none of these.
What type of account is Discount on Bonds Payable, and what is its normal balance?a. Adjusting account; Creditb. Reversing account; Debitc. Contra liability account; Debitd. Contra liability account; Credit
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