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intermediate accounting reporting
Schaum's Outline Of Intermediate Accounting II, Second Edition (Schaum's Outline Series) 2nd Edition Baruch Englard - Solutions
If the lessor makes a profit at the time of the sale, the lease is a lease.
The right to purchase the asset at the end of the lease term at a low price is called a .
For the lessee, only of conditions need to be met for a lease to qualify as a capital lease; for the lessor, an additional conditions are required.
The two types of capital leases are: leases and leases.
The original owner of the asset is called the ; the new owner is called the .
The two broad classifications of leases are leases and leases.
Foolish Corporation had the following information relating to its installment sales for 19X1 and 19X2, for which it uses the installment method of accounting:19X1 19X2 Installment sales $50,000 $80,000 Cost of goods sold 35,000 60,000 Gross profit $15,000 $20,000 Collections on 19X1 sales $25,000
The following data relate to a construction project of Construction Corporation that has a contract price of $200,000:19A 19B Total Costs incurred $ 60,000 $ 90,000 $150,000 Billings 100,000 100,000 200,000 Collections 80,000 120,000 200,000 Estimated remaining costs at year-end 80,000 —
Corporation D purchases 1,000 shares of stock for $100,000. It then receives 1,000 stock rights enabling it to purchase 500 additional shares (two rights are needed per share) at $60 per share. At this time the market price per share and per right are $80 and $15, respectively. It then exercises
CorporationApurchased 25% of Corporation B’s 100,000 shares of outstanding stock at a price of $1.00 per share. During the first year after acquisition, Corporation B incurred a net loss of $10,000 and distributed a dividend of 50 cents per share. Prepare entries for these transactions using:(a)
During 19X9, GX Corporation had net income of $100,000, 1,000 shares of common stock outstanding, and 1,000 shares of 5%, $100 par, cumulative preferred stock outstanding. The preferred shares are convertible into 500 shares of common stock in 3 years. GX also had a $100,000 par bond, 10%,
A revenue recognition method that recognizes revenue only after the total cost has been received is called the method.
Under the above method, each year’s profit is temporarily placed into an account called .
The method of revenue recognition that recognizes revenue piecemeal based upon the gross profit percentage is called the method.
The billings account is not a account; rather it is a to the construction account.
The two methods of accounting for long-term construction contracts are the method and the method.
Revenue is usually recognized when it is both and .
The three possible courses of action one can take with stock rights are: , , or.
The two methods of accounting for long-term investments in equity securities are the method and the method.
Short-term stock investments that can easily be sold and whose intention is to sell them within 1 year (or the operating cycle) are called .
For diluted earnings per share, the interest avoided on convertible bonds must be added to the .
For earnings per share, if the preferred stock is noncumulative, then its dividends are subtracted in the numerator only if .
The two types of earnings per share are and .
Special rights that grant the holder to receive cash based on the difference between the grant price of the stock and the market price are called .
The above expense is gradually recognized over the employees .
A stock option plan generates an expense called .
Rights to purchase shares of stock at a fixed price are called stock or stock .
When bonds are converted into stock, the stock is recorded at value rather than at value.
If merchandise is repossessed, it is recorded at its fair market value.True–False
Under the installment method, the entire revenue is recognized when the last installment has been collected.True–False
The billings account is considered to be a contra asset.True–False
Under the percentage-of-completion method, the annual profit is debited to the Billings account.True–False
The cash surrender value of life insurance is considered to be an expense.True–False
Stock dividends increase cost per share.True–False
The equity method should be used if 20 to 50% of the subsidiary’s stock is purchased.True–False
If a bond is purchased between interest dates, the increase in the bond price for accrued interest increases interest revenue to the buyer.True–False
Discounts and premiums on short-term debt securities are not amortized.True–False
Both trading and available-for-sale securities need market adjustments on December 31.True–False
If the market price falls below cost, the difference is considered a realized loss.True–False
Broker’s fees on the purchase of securities are considered to be expenses.True–False
An investment is considered temporary if it is readily marketable, or the intention is to convert it to cash within 1 year (or the operating cycle).True–False
If convertible bonds were outstanding for only a fraction of the year rather than for a whole year, this must be taken into account in the denominator, but not in the numerator.True–False
Preferred stock conversions affect the denominator but not the numerator.True–False
The exercise of stock options sometimes affects only the denominator of EPS, not the numerator.True–False
For diluted EPS, the average market price of the stock is used to determine the number of shares repurchased for the treasury.True–False
If preferred stock is cumulative, its dividend must be subtracted in the numerator regardless of whether or not declared.True–False
Diluted EPS is determined by dividing the net income (less preferred dividends) by common shares outstanding.True–False
21 Company M uses the cost recovery method. During 19A, it sells goods with a cost of $15,000 for$25,000, payable in installments of $10,000, $10,000 and $5,000, respectively, beginning in 19A. How much profit should be recognized each year?
20 Company L makes a sale of $12,000 which is payable over 3 years (one installment payment per year)including interest of 10%.(a) How much is each installment payment?(b) Prepare a table that indicates for each year the necessary journal entry and the amount of realized gross profit.
19 Company K had an account receivable on an installment sale in the amount of $10,000. At the time the related deferred gross profit was $4,000, the customer defaulted and the merchandise was repossessed, with a fair market value of $3,000. Prepare the required journal entry.
18 For the previous problem, show partial balance sheets and income statements for each year.
17 S & W Metals, Inc. had the following information regarding its installment sales for 19A and 19B:19A 19B Installment sales $300,000 $500,000 Cost of goods sold 180,000 350,000 Gross profit $120,000 $150,000 Gross profit % ? ?Collections on 19A sales $140,000 $160,000 Collections on 19B sales
16 In 19C Company D determines it will incur a $50,000 loss on a construction project. Prepare the required journal entry if:(a) the company uses the completed-contract method;(b) the company uses the percentage-of-completion method and recognized profits of $10,000 and$15,000, respectively, in 19A
15 In the previous problem, if Company C used the completed-contract method, how much profit should it recognize in 19B? In 19A? Why?
14 Company C uses the percentage-of-completion method for construction projects. During 19A and 19B it incurred construction costs of $10,000 and $20,000 respectively, and it expects to incur another$40,000 additional costs in the future. In 19A, it recognized $5,000 profit. The total contract
13 For the previous problem, prepare entries for each year under the percentage-of-completion method and show a partial balance sheet and income statement.
12 Company A has the following information regarding a construction project whose selling price is $400:19A 19B 19C Total Costs incurred $100 $150 $ 60 $310 Billings 100 170 130 400 Collections 100 120 180 400 Expected completion costs 250 50 — —Prepare entries for each year under the
If the degree of uncertainty regarding collections is very high, _______ it is then permissible to use the method.
If a buyer defaults on installment payments, _______ the repossessed merchandise is recorded at _______ .
Under the installment method, a portion of each cash collection is considered profit based upon the percentage _______ .
For precious metals and agricultural products, _______ revenue may be recognized before .
Under both methods, any anticipated losses would be recognized _______ .
Under the percentage-of-completion method _______ , the annual profit is debited to the account.
The nature of the billings account is that of a _______ .
The inventory account in construction projects is called _______ .
No matter which method is used, the total profit recognized over the life of the project is _______ .
The two methods of accounting for construction projects are the method _______ and the method _______ .
In order for revenue to be recognized, it must be both _______ and _______ .
Generally, revenue from the sale of a product should be recognized upon , while revenue from the sale of services should be recognized a _______ t .
28 When the chief executive officer of Corporation K died, the company received insurance benefits of$500,000. At this time, the cash surrender value was $150,000. Prepare an entry for the receipt of the insurance benefits.1===+5A.6 Brown Corporation has investments with a cost and market value of
27 Company H has an insurance policy for which it pays an annual premium of $1,000. During 19B, the cash surrender value increased from $300 to $400. Prepare an entry for the payment of the insurance premium.
26 Use the same information as in the previous example and assume that 50 of the rights are exercised to purchase new shares. Prepare the entry for this purchase.
25 Company H engaged in the following stock transactions during 19A:(a) Purchased 200 shares General Motors stock at $125 per share.(b) Received 1 right per share to purchase 100 new shares at $115 per share. At this time, the market values per share and per right are $120 and $4,
24 Company G purchases 250 shares of stock at $20 per share. It then receives a 10% stock dividend.Several months later it decides to sell 50 shares at $18 per share.(a) After the stock dividend, what was the new cost per share?(b) Prepare any necessary journal entries for these transactions.
23 Assume the same information as in the previous problem except that significant influence has been acquired. Prepare the entries and determine the balance in the investment account.
22 Parent Company purchases 40% of Subsidiary Company’s 200,000 shares for $240,000. During the year, Subsidiary earns net income of $40,000 and distributes cash dividends of 20 cents per share. This purchase is considered a long-term investment. If no significant influence was acquired, then
21 A 4-year, $170,000 bond is purchased at 104 on January 1, 19A. After 3 years elapse, the bond is sold at par. Prepare the entry for the sale.
20 Corporation F purchases a $130,000 par, 10% bond at 104 on January 1, 19A. The interest is payable annually on December 31 and the bond matures in 5 years.(a) Prepare the required entries January 1 and December 31.(b) Determine the net interest revenue for the year.(c) Show how this bond would
19 A short-term bond dated January 1, 19A, is purchased on May 1, 19A at its par of $80,000. The bond pays interest on December 31 of 10%. Prepare the entries for May 1 and December 31.
18 CorporationApurchases 70 shares of General Motors stock at $50 per share as a short-term investment, and pays a brokers’ fee of $350. It later sells these shares at $80 per share and pays a broker’s fee of $550. Prepare entries for the purchase and the sale.
A part of the annual life insurance premium should be debited to an asset account called _______ .
Certificates that permit one to buy stock at a fixed price are called _______ or _______ .
The receipt of a stock dividend the cost per _______ share of the investment.
Under the cost method, dividends are considered to be _______ , while under the other method, _______ they are considered to be _______ .
If a company purchases 20 to 50% of another company’s stock, _______ the method should be used, unless it has no influence _______ .
If a bond investment is sold before maturity at a price greater than its book value there is a _______ .
Amortization of a bond premium interest revenue, _______ while amortization of a bond discount interest revenue.
If a bond investment is purchased between interest dates _______ , its price will be increased by the amount of _______.
The nature of the Allowance to Reduce Cost to Market account is that of a _______ .
Brokers’ fees are to be debited to an account rather than to an account _______ .
If an investment can readily be sold, and the intention of management is to sell it in the short-term, it is called a _______ .
38 On January 1, 2007, Google grants its employees 8,000 SARs. Each SAR grants the employee to receive cash for the difference between the grant price of $80, and the stock’s market price on December 31, 2011.The year-end market prices are as follows:2007: $85 2009: $98 2011: $97 2008: 91 2010:
37 Corporation H, on December 31, 2007, contractually commits itself to issue 5,000 common shares on December 31, 2008.Case A: The shares will automatically be issued on December 31, 2008.Case B: The shares will only be issued if the 2008 net income is at least$800,000. For 2007, the net income was
36 Use the same information as in the previous example but assume Corporation G split its stock 2:1 on April 1. Determine the weighted average number of shares outstanding.
35 Corporation G had the following transactions involving its own common stock during 19A:Jan. 1 Issued 1,000 shares.Mar. 1 Issued 3,000 shares.May 1 Bought back 500 shares.Oct. 1 Issued 2,000 shares.Dec. 1 Issued 1,000 shares.Determine the weighted average number of shares outstanding during the
34 Corporation F earned income of $40,000 during 19A and had 10,000 shares of common stock outstanding.It did not have any preferred stock but it did have 1,000 stock options outstanding. These options are convertible into 1,000 shares common stock at $70 per share. The average market price of
33 Corporation E had net income of $130,000 and 5,000 shares of common stock outstanding during 19A.It also had 1,000 shares of 6% cumulative preferred stock ($100 par) convertible into 500 shares of common stock, Determine basic and diluted EPS. Assume a tax rate of 20%.
32 Assume the same information as in the previous problem except that the bond was issued on October 1.Once again, determine basic and diluted EPS.
31 Corporation D earned net income of $70,000 during 19A and had an average of 10,000 shares of common stock outstanding. It also had a $50,000, 8% bond payable convertible after 3 years into 2,000 shares of common stock. There is no preferred stock outstanding. Determine basic EPS and diluted EPS.
30 Corporation C earned net income of $250,000 during 19A. It also had 20,000 shares of common stock and 5,000 shares of $100 par, 6% preferred stock outstanding during the year. No dividends were declared this year. Determine basic EPS if:(a) the preferred stock is cumulative.(b) the preferred
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