Accounting Principles A Business Perspective Financial Accounting Chapters 9 To 18 1st Edition Bill Buxton, Amy Sibiga - Solutions

When the fair market value rules are followed, which of the following is true when the market value of the stocks in the Trading Securities account falls below their cost?a. The Unrealized Losses on Trading Securities account is credited.b. The Recovery of Market Value of Trading Securities account
Under the equity method, which of the following is true?a. Dividends received reduce the investment account.b. Dividends received increase the investment account.c. The investor's share of net income decreases the investment account.d. The investor's share of net loss increases the investment
In which of the following cases is the investor company limited to use of the equity method in accounting for its stock investments?a. Short-term investments.b. Long-term investments of less than 20 percent.c. Long-term investments of 20 percent—50 percent.d. Long-term investments of more than 50
When making elimination entries, the entries are made only on the consolidated statements work sheet and not on the accounting records of the parent and subsidiary.true or false.
Trading securities and available-for-sale securities should be grouped separately in applying the fair market value rules.true or false.
In a stock split, the investor does not recognize revenue, but reduces the cost per share of stock.true or false.
The cost method should be used when a corporation makes a long-term investment of less than 20 percent, and there is no significant control.true or false.
Under the cost method, the investment account is adjusted when dividends are received.true or false.
Group project G With one or two other students, locate the annual reports of three companies and study their statements of stockholders' equity. Determine why the number of common shares outstanding changed (if at all) during the current year. For instance, the number of outstanding shares may have
Group project F With a small group of students, go to the library and locate Statement of Financial Accounting Standards No. 4, "Reporting Gains and Losses from Extinguishing of Debt", published by the Financial Accounting Standards Board. Write a report to your instructor giving the highlights of
Group project E In teams of two to three students, go to the library to find articles evaluating accounting software packages. Use a periodicals index such as the Accounting and Tax Index or the Business Periodicals Index to locate these articles.Compare the cost and features of three accounting
Ethics case–Writing experience D Based on the ethics case, answer the following questions concerning Ace Chemical Company in writing:a. Is this transaction fair to the creditors?b. Why would the officers not merely declare a USD 4 million cash dividend? Is the proposed treasury stock transaction
Annual report analysis C The following questions are based on the Coca-Cola Company's 2006 annual report. To view the report, go to the Coca-Cola web site at www.cocacola.com. After you activate the web site, click on The Coca-Cola Company.Go to investors and a menu will drop down that has
Business decision case B The following journal entries are for Keel Corporation:1.Retained earnings 12,000 Reserve for uncollectible accounts 12,000 To record the adjusting entry for uncollectible accounts.2.Retained earnings 48,000 Reserve for depreciation 48,000 To record depreciation
Business decision case A The stockholders' equity section of the Bates Corporation's balance sheet for 2009 June 30, follows:Stockholders' equity:Paid-in Capital:Common stock - $20 par value; authorized 200,000 shares; issued and outstanding 80,000 shares $1,600,00 0 Paid-in capital in excess of
Alternate problem H Selected data of Ace Company for the year ended 2009 December 31, are:Sales, net $1,000,000 Interest expense 90,000 Cash dividends on common stock 150,000 Selling and administrative expenses 245,000 Cash dividends on preferred stock 70,000 Rent revenue 400,000 Cost of goods sold
Alternate problem G The stockholders' equity section of Sager Company's 2008 December 31, balance sheet follows:Stockholders' equity:Paid-In Capital:Preferred stock - $60 par value, 5%; authorized, 5,000 shares;issued and outstanding, 2,500 shares$150,000 Common stock – without par or stated
Alternate problem F The stockholders' equity of Acorn Company as of 2008 December 31, consisted of 20,000 shares of authorized, issued, and outstanding USD 50 par value common stock, paid-in capital in excess of par of USD 240,000, and retained earnings of USD 400,000. Following are selected
Alternate problem E The following information relates to Dahl Corporation for the year 2009:Net income for the year $ 1,680,000 Dividends declared on common stock 235,000 Dividends declared on preferred stock 134,000 Retained earnings, January 1, unappropriated 5,040,000 Appropriation for
Alternate problem D Following are selected transactions of Taylor Corporation:2004 Dec. 31 By action of the board of directors, USD 450,000 of retained earnings was appropriated to provide for future expansion of the company's main building. (On the last day of each of the next four years, the same
Alternate problem C The ledger of Falcone Company includes the following account balances on 2009 September 30:Appropriation for contingencies $210,000 Appropriation for plant expansion 392,000 Retained earnings, unappropriated 700,000 During October 2009, the company took action to:• Increase
Alternate problem B The stockholders' equity section of Carson Company's 2008 December 31, balance sheet follows:Stockholders' equity:Paid-In Capital:Common stock - $120 par value; authorized, 2,000 shares; issued and outstanding, 1,000 shares$120,000 Paid-in capital in excess of par value 6,000
Alternate problem A The trial balance of Dex Corporation as of 2009 December 31, contains the following selected balances:Notes payable (17%, due 2011 May 1) $4,000,000 Allowance for uncollectible accounts 60,000 Common stock (without par value, $20 stated value; 300,000 shares authorized, issued,
Assume the applicable federal income tax rate is 40 percent. All of the items of expense, revenue, and loss are included in the computation of taxable income. The earthquake loss resulted from the first earthquake experienced at the company's location. In addition, the company discovered that in
Problem H Selected data for Brinks Company for 2009 are given below:Common stock - $20 par value $2,000,000 Sales, net 1,740,000 Selling and administrative expenses 320,000 Cash dividends declared and paid 120,000 Cost of goods sold 800,000 Depreciation expense 120,000 Interest revenue 20,000 Loss
Problem G The following stockholders' equity section is from Bell Company's 2008 October 31, balance sheet:Stockholders' equity:Paid-in capital:Preferred stock - $60 par value, 6%; 1,000 shares authorized; 350 shares issued and outstanding$ 21,000 Common stock - $6 par value; 100,000 shares
Problem F The stockholders' equity of Briar Company on 2008 December 31, consisted of 1,000 authorized, issued, and outstanding shares of USD 72 cumulative preferred stock, stated value USD 240 per share, which were originally issued at USD 1,192 per share; 100,000 shares authorized, issued, and
Problem E The stockholders' equity of Sayers Company at 2009 January 1, is as follows:Common stock – no-par value, stated value of $20; 100,000 shares authorized, 60,000 shares issued $1,200,000 Paid-in capital in excess of stated value 200,000 Appropriation per loan agreement 75,200
Problem D Following are selected data of Kane Corporation at 2009 December 31:Net income for the year $512,000 Dividends declared on preferred stock 72,000 Retained earnings appropriated during the year for future plant expansion 240000 Dividends declared on common stock 64,000 Retained earnings,
Problem C Following are selected transactions of White Corporation:2002 Dec. 31 The board of directors authorized the appropriation of USD 50,000 of retained earnings to provide for the future acquisition of a new plant site and the construction of a new building. (On the last day of the next six
Problem B The only stockholders' equity items of Jody Company at 2009 June 30, are:Stockholders' equity:Paid-in capital:Common stock - $200 par value, 10,000 shares authorized, 6,000 shares issued and outstanding$1,200,000 Paid-in capital in excess of par value 480,000 Total paid-in capital
Problem A The bookkeeper of Hart Company has prepared the following incorrect statement of stockholders' equity for the year ended 2009 December 31: Stockholders' equity:Paid-In Capital:Preferred stock – 6%, cumulative (8,000 shares) $1,003,200 Common stock – 50,000 shares 2,856,000 Total
Exercise L Dean Company had an average number of shares of common stock outstanding of 200,000 in 2009 and 215,000 in 2010. Net income for these two years was as follows:2009 $2,208,000 2010 2,304,000a. Calculate EPS for the years ended 2009 December 31, and 2010.b. What might the resulting figures
Exercise K The following information relates to Perry Corporation for the year ended 2009 December 31:Common stock outstanding 75,000 shares Income from continuing operations $1,523,200 Loss on discontinued operations (net of tax) 240,000 Extraordinary gain (net of tax) 144,000 Calculate EPS for
Exercise J Conner Company had retained earnings of USD 56,000 as of 2009 January 1. In 2009, Conner Company had sales of USD 160,000, cost of goods sold of USD 96,000, and other operating expenses, excluding taxes, of USD 32,000. In 2009, Conner Company discovered that it had, in error, depreciated
Exercise I Vista Company has revenues of USD 80 million, expenses of USD 64 million, a tax-deductible earthquake loss (its first such loss) of USD 4 million, and a tax-deductible loss of USD 6 million resulting from the voluntary early extinguishment (retirement) of debt. The assumed income tax
Exercise H Evan Company received 200 shares of its USD 200 stated value common stock on 2009 December 1, as a donation from a stockholder. On 2009 December 15, it reissued the stock for USD 62,400 cash. Give the journal entry or entries necessary for these transactions.
Exercise G Kelly Company had outstanding 50,000 shares of USD 20 stated value common stock, all issued at USD 24 per share, and had retained earnings of USD 800,000. The company reacquired 2,000 shares of its stock for cash at book value from the widow of a deceased stockholder.a. Give the entry to
Exercise F The balance sheet of Willis Company contains the following:Appropriation per loan agreement USD 900,000a. Give the journal entry made to create this account.b. Explain the reason for the appropriation's existence and its manner of presentation in the balance sheet.
Exercise E Grant Corporation's stockholders' equity consisted of 60,000 authorized shares of USD 30 par value common stock, of which 30,000 shares had been issued at par, and retained earnings of USD 750,000. The company then split its stock, two for one, by changing the par value of the old shares
Exercise D Kevin Company has outstanding 75,000 shares of common stock without par or stated value, which were issued at an average price of USD 80 per share, and retained earnings of USD 3,200,000. The current market price of the common stock is USD 120 per share. Total authorized stock consists
Exercise C The stockholders' equity section of Jay Company's balance sheet on 2009 December 31, shows 100,000 shares of authorized and issued USD 20 stated value common stock, of which 9,000 shares are held in the treasury. On this date, the board of directors declared a cash dividend of USD 2 per
Exercise B Fogg Company has issued all of its authorized 5,000 shares of USD 400 par value common stock. On 2009 February 1, the board of directors declared a dividend of USD 12 per share payable on 2009 March 15, to stockholders of record on 2009 March 1. Give the necessary journal entries.
Exercise A The 2009 December 31, trial balance of Yamey Corporation had the following account balances:Common stock (no-par value; 200,000 shares authorized, issued, and outstanding; stated value of $20 per share) $4,000,000 Notes payable (12% due 2010 May 1) 500,000 Retained earnings,
➢ Why are stockholders and potential investors interested in the amount of a corporation's EPS? What does the EPS amount reveal that total earnings do not.
➢ What are prior period adjustments? Where and how are they reported?
➢ Give an example of a change in accounting principle. How are the effects of changes in accounting principle reported?
➢ What are extraordinary items? Where and how are they reported?
➢ Describe a discontinued operation.
➢ What is a statement of stockholders' equity?
➢ What is the purpose of a retained earnings appropriation?
➢ What are liquidating dividends?
➢ What is the difference between a small stock dividend and a large stock dividend?
➢ Why is a dividend consisting of the distribution of additional shares of the common stock of the declaring corporation not considered income to the recipient stockholders?
➢ What are the possible reasons for a corporation to declare a stock dividend?
➢ On May 8, the board of directors of Park Corporation declared a dividend, payable on June 5, to stockholders of record on May 17. On May 10, James sold his capital stock in Park Corporation directly to Benton for USD 20,000, endorsing his stock certificate and giving it to Benton. Benton placed
➢ How should a declared but unpaid cash dividend be shown on the balance sheet? How should a declared but unissued stock dividend be shown?
➢ The following dates are associated with a cash dividend of USD 80,000:July 15, July 31, and August 15. Identify each of the three dates, and give the journal entry required on each date, if any.
➢ What is the effect of each of the following on the total stockholders'equity of a corporation: (a) declaration of a cash dividend, (b) payment of a cash dividend already declared, (c) declaration of a stock dividend, and (d) issuance of a stock dividend already declared?
➢ What is the purpose underlying the statutes that provide for restriction of retained earnings in the amount of the cost of treasury stock? Are such statutes for the benefit of stockholders, management, or creditors?
➢ What are some possible reasons for a corporation to reacquire its own capital stock as treasury stock?
➢ Does accounting for treasury stock resemble accounting for an asset? Is treasury stock an asset? If not, where is it properly shown on a balance sheet?
➢ Name several sources of paid-in capital. Would it suffice to maintain one account called Paid-In Capital for all sources of paid-in capital?Why or why not?
➢ What are the two main elements of stockholders' equity in a corporation? Explain the difference between them.
Which item is not reported as a separate line item below income from continuing operations, net of tax effects, in the income statement?a. Extraordinary items.b. Prior period adjustments.c. Discontinued operations.d. Changes in accounting principle.
ABC Corporation declared the regular quarterly dividend of USD 2 per share. ABC had issued 12,000 shares and subsequently reacquired 2,000 shares as treasury stock. What would be the total amount of the dividend?a. USD 24,000.b. USD 28,000.c. USD 20,000.d. USD 4,000.
An individual stockholder is entitled to receive any dividends declared on stock owned, provided the stock is held on the:a. Date of declaration.b. Date of record.c. Date of payment.d. Last day of a fiscal year.
Treasury stock should be shown on the balance sheet as a:a. Reduction of the corporation's stockholders' equity.b. Current asset.c. Current liability.d. Investment asset.
If the company reissues 500 shares of the treasury stock in (2) for USD 36 per share, the entry is:a. Cash (+A) 18,000 Treasury Stock (+SE) 15,000 Paid-In Capital – Treasury Stock Transactions (+SE) 3,000b. Cash (+A) 18,000 Treasury stock (+SE) 18,000c. Cash (+A) 18,000 Treasury stock (+SE)
Bevins Company issued 10,000 shares of USD 20 par value common stock at USD 24 per share. Bevins reacquired 1,000 shares of its own stock at a cost of USD 30 per share. The entry to record the reacquisition is:a. Premium on Treasury Stock (-SE) 10,000 Treasury stock (-SE) 20,000 Cash (-A) 30,000b.
Which of the following is not included in paid-in capital?a. Common Stock.b. Paid-In Capital—Donations.c. Stock Dividend Distributable.d. Appropriation per Loan Agreement.
Heavy frost damage suffered by a Florida citrus grower's orange trees would probably be reported as an extraordinary item. true or false.
A retained earnings appropriation reduces the total stockholders' equity shown on the balance sheet. true or false.
A stock dividend reduces the retained earnings balance and permanently capitalizes the reduced portion of the retained earnings. true or false.
Dividends are expenses since they decrease stockholders' equity.true or false.
The purchase of treasury stock does not affect stockholders' equity.true or false.
The retained earnings balance of a corporation is part of its paid-in capital. true or false.
Group project G In a group of one or two students, contact state officials and/or consult library resources to inquire about the incorporation laws in your state. Determine your state laws regarding the issuance of stock at an amount below par value, how legal capital is determined, and the
Group project F In a team of two or three students, locate the annual reports of three companies that have preferred stock in their stockholders' equity section.Determine the features of the preferred stock. Analyze the data in the annual report to determine whether dividends have been paid on the
Group project E In teams of two or three students, examine the annual reports of three companies and calculate each company's return on common shareholders'equity for the most recent two years. At least two years are needed to observe any changes. As a team, decide in which of the three companies
Ethics case D Refer to the ethics case concerning Joe Morrison to answer the following questions:a. Which alternative would benefit the company and its management over the next several years?b. Which alternative would benefit society?c. If you were Morrison, which side of the argument would you
Annual report analysis C Determine the 2003 return on average common stockholders' equity for The Limited in the Annual report appendix. Explain in writing why this information is important to managers, investors, and creditors.
Business decision case B Jesse Waltrip recently inherited USD 480,000 cash that he wishes to invest in the common stock of either the West Corporation or the East Corporation. Both corporations have manufactured the same types of products for five years. The stockholders' equity sections of the two
Business decision case A Rudd Company and Clay Company have extremely stable net income amounts of USD 4,800,000 and USD 3,200,000, respectively.Both companies distribute all their net income as dividends each year. Rudd Company has 100,000 shares of USD 80 par value, 6 percent preferred stock, and
Alternate problem G Mendell, Inc., is a corporation in which all of the outstanding preferred and common stock is held by the four Lehman brothers. The brothers have an agreement stating that the remaining brothers will, upon the death of a brother, purchase from the estate his holdings of stock in
The stockholders' equity sections from three different corporations' balance sheets follow.1) Stockholders' equity:Paid-in capital:Preferred stock—7% cumulative, $240 par value,500 shares authorized, issued, and outstanding $ 120,000 Common stock—$48 par value, 10,000 shares authorized, issued
Alternate problem E Kane Company issued all of its 5,000 shares of authorized preferred stock on 2008 January 1, at USD 100 per share. The preferred stock is no-par stock, has a stated value of USD 5 per share, is entitled to a cumulative basic preference dividend of USD 6 per share, is callable at
Alternate problem D Tempo Company received its charter on 2009 April 1, authorizing it to issue: (1) 10,000 shares of USD 400 par value, USD 32 cumulative, convertible preferred stock; (2) 10,000 shares of USD 12 cumulative no-par preferred stock having a stated value of USD 20 per share and a
Alternate problem C On 2009 July 3, Barr Company was authorized to issue 15,000 shares of common stock; 3,000 shares were issued immediately to the incorporators of the company for cash at USD 320 per share. On July 5 of that year, an additional 300 shares were issued to the incorporators for
Alternate problem B On 2009 January 1, Cowling Company was authorized to issue 500,000 shares of USD 5 par value common stock. It then completed the following transactions:2009 Jan. 14 Issued 90,000 shares of common stock at USD 24 per share for cash.29 Gave the promoters of the corporation 50,000
Alternate problem A On 2005 January 1, the retained earnings of Quigley Company were USD 432,000. Net income for the succeeding five years was as follows:2005 $288,000 2006 216,000 2007 4,800 2008 48,000 The outstanding capital stock of the corporation consisted of 2,000 shares of preferred stock
Problem G Haft Corporation has an agreement with each of its 15 preferred and 30 common stockholders that in the event of the death of a stockholder, it will purchase at book value from the stockholder's estate or heirs the shares of Haft Corporation stock held by the deceased at the time of death.
Problem F The common stock of Lang Corporation is selling on a stock exchange for USD 90 per share. The stockholders' equity of the corporation at 2009 December 31, consists of:Stockholders' equity:Paid-in capital:Preferred stock—9% cumulative,$120 par value, $120 liquidation value, 3,000 shares
Problem E On 2008 January 2, the King Company received its charter. It issued all of its authorized 3,000 shares of no-par preferred stock at USD 104 and all of its 12,000 authorized shares of no-par common stock at USD 40 per share. The preferred stock has a stated value of USD 50 per share, is
Problem D On 2009 May 1, Farmington Company received a charter that authorized it to issue:• 4,000 shares of no-par preferred stock to which a stated value of USD 12 per share is assigned. The stock is entitled to a cumulative dividend of USD 9.60, convertible into two shares of common stock,
Problem C In the corporate charter that it received on 2009 May 1, Norris Company was authorized to issue 15,000 shares of common stock. The company issued 1,000 shares immediately for USD 82 per share, cash.On July 2, the company issued 100 shares of stock to a lawyer to satisfy a USD 8,400 bill
Problem B On 2008 December 27, Glade Company was authorized to issue 250,000 shares of USD 24 par value common stock. It then completed the following transactions:2009 Jan. 14 Issued 45,000 shares of common stock at USD 30 per share for cash.29 Gave the promoters of the corporation 25,000 shares of
Problem A The outstanding capital stock of Robbins Corporation consisted of 3,000 shares of 10 percent preferred stock, USD 250 par value, and 30,000 shares of no-par common stock with a stated value of USD 250. The preferred was issued at USD 412, the common at USD 480 per share. On 2005 January
Exercise H The stockholders' equity of Graf Company's balance is as follows:Stockholders' equity:Paid-in capital:Common stock—without par value, $12 stated value; authorized 100,000 shares;issued and outstanding, 70,000 shares $ 840,000 Paid-in capital in excess of stated value 340,000 Total
Exercise G Why would a law firm ever consider accepting stock of a new corporation having a total par value of USD 320,000 as payment in full of a USD 480,000 bill for legal services rendered? If such a transaction occurred, give the journal entry the issuing company would make on its books.

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Accounting Principles A Business Perspective Financial Accounting Chapters 9 To 18 1st Edition Bill Buxton, Amy Sibiga - Solutions

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