Questions and Answers of Introductory Financial Accounting

Complete the following table for the three categories of marketable investment securities: Recognition of Cash Flow from Purchase or Sale of Securitles Is Classifled as Investing activity Unrealized
Molten, Inc. began Year 2 with $100,000 in both cash and common stock. The company engaged in the following investment transactions during Year 2:1. Purchased $20,000 of marketable investment
The following information pertains to Botter Supply Co. for Year 1:1. Purchased $100,000 of marketable investment securities.2. Earned $10,000 of cash investment revenue.3. Sold for $30,000
Norris Co. purchased $36,000 of marketable securities on March 1, Year 1. On the company’s fiscal year closing date, December 31, Year 1, the securities had a market value of $27,000. During Year
The following financial statements and information are available for Blythe Industries Inc.:Income Statement For the Year Ended December 31, 2017Sales revenue
Tesla, Inc. began operations in 2003 but did not begin selling its stock to the public until June 28, 2010. It has lost money every year it has been in existence, and by December 31, 2016, it had
Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B and use it to answer the following questions:a. For the year ended January 28, 2017
The following financial statements were drawn from the records of Boston Materials, Inc.:Income Statement For the Year Ended December 31, Year 2Sales revenue
The Electric Company engaged in the following transactions during Year 2. The beginning cash balance was $43,000 and the ending cash balance was $48,600.1. Sales on account were $274,000. The
The comparative balance sheets and an income statement for Wang Beauty Products, Inc. are shown next:Income Statement For the Year Ended December 31, Year 2Sales
The following financial statements were drawn from the records of Culinary Products Co.:Income Statement For the Year Ended December 31, Year 2Sales revenue
The following information was drawn from the year-end balance sheets of Long’s Wholesale, Inc.:The following is additional information regarding transactions that occurred during Year 2:1. Long’s
The following information was drawn from the year-end balance sheets of Vigotti Company:The following is additional information regarding transactions that occurred during Year 2:1. Investment
The following accounts and corresponding balances were drawn from Crimson Sports, Inc.’s Year 2 and Year 1 year-end balance sheets:The Year 2 income statement is shown next: Income StatementSales
The following accounts and corresponding balances were drawn from Cushing Company’s Year 2 and Year 1 year-end balance sheets:Other information drawn from the accounting records:1. Dividends paid
On January 1, Year 1, Milam Company had a balance of $300,000 in its Common Stock account. During Year 1, Milam paid $18,000 to purchase treasury stock. Treasury stock is accounted for using the
On January 1, Year 1, Van Company had a balance of $800,000 in its Bonds Payable account. During Year 1, Van issued bonds with a $300,000 face value. There was no premium or discount associated with
The following accounts and corresponding balances were drawn from Teva Company’s Year 2 and Year 1 year-end balance sheets:Other information drawn from the accounting records:1. Teva incurred a
On January 1, Year 1, Sanita Company had a balance of $76,300 in its Office Equipment account. During Year 1, Sanita purchased office equipment that cost $30,300. The balance in the Office Equipment
On January 1, Year 1, Poole Company had a balance of $178,000 in its Land account. During Year 1, Poole sold land that had cost $71,000 for $95,000 cash. The balance in the Land account on December
The following accounts and corresponding balances were drawn from Geneses Company’s Year 2 and Year 1 year-end balance sheets:The Year 2 income statement is shown next: Income StatementSales
The following accounts and corresponding balances were drawn from Pixi Company’s Year 2 and Year 1 year-end balance sheets:The Year 2 income statement is shown next: Income StatementSales
The following accounts and corresponding balances were drawn from Osprey Company’s Year 2 and Year 1 year-end balance sheets:During the year, $84,000 of unearned revenue was recognized as having
Pella Company presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Pella’s Year 2 and Year 1 year-end balance sheets:The
Napoleon Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company’s Year 2 and Year 1 year-end
An accountant for Farve Enterprise Companies (FEC) computed the following information by making comparisons between FEC’s Year 2 and Year 1 balance sheets. Further information was determined by
There were 36,899 McDonald’s Company restaurants in 120 countries as of December 31, 2016. Shake Shack, Inc., a much newer fast-food restaurant company, began operations as a hot dog cart in 2001.
Listed here are data for five companies. These data are for the companies’ 2016 fiscal years. The market price per share is the closing price of the companies’ stock as of March 24, 2017. Except
The following are the stockholders’ equity sections of three public companies for years ending in 2015 and 2016:Requireda. Divide the class into three sections and divide each section into groups
Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B and use it to answer the following questions:Requireda. What is the par value per
An investor is trying to decide whether to purchase stock in Henderson Inc. or Glover Corporation. Glover Corporation reported annual earnings per share of $8, and the current market price of Glover
Rabern Corp. completed the following transactions in Year 1, the first year of operation.1. Issued 15,000 shares of $10 par common stock at par.2. Issued 5,000 shares of $50 stated value preferred
Burk Corp. completed the following transactions in Year 1, the first year of operation:1. Issued 30,000 shares of $10 par common stock for $15 per share.2. Issued 6,000 shares of $100 par, 5
The stockholders’ equity section of the balance sheet for Stinson Company at December 31, Year 1, is as follows:The market value per share of the common stock is $40, and the market value per
Edgar Corporation was authorized to issue 100,000 shares of $8 par common stock and 50,000 shares of $80 par, 4 percent, cumulative preferred stock. Edgar Corporation completed the following
The Corners Corporation experienced three events that affected its financial statements, as shown in the following table. Assume that the original issue (Entry 1) Awas for 400,000 shares, and the
Tyler Corp. had the following stock issued and outstanding at January 1, Year 1.1. 60,000 shares of no-par common stock.2. 15,000 shares of $100 par, 4 percent, cumulative preferred stock. (Dividends
Best Auto Parts Company was started on January 1, Year 1, when the owners invested $120,000 cash in the business. During Year 1, the company earned cash revenues of $80,000 and incurred cash expenses
Pepper Company’s earnings were approximately the same in Year 1 and Year 2. Even so, the company’s P/E ratio dropped significantly.RequiredSpeculate about why Pepper’s P/E ratio dropped
On December 30, Odom Enterprises (OE) had $120,000 in cash, $35,000 in liabilities, $50,000 of common stock, and $35,000 in unrestricted retained earnings. On December 31, OE appropriated retained
On October 1, Year 1, Nicholes Corporation declared a $50,000 cash dividend to be paid on December 15 to shareholders of record on November 1.RequiredRecord the events occurring on October 1,
The following information pertains to Ming Corp. at January 1, Year 1:Common stock, $10 par, 50,000 shares authorized,3,000 shares issued and outstanding
Reiss Inc. was organized on June 1, Year 1. It was authorized to issue 500,000 shares of $10 par common stock and 100,000 shares of 4 percent cumulative class A preferred stock. The class A stock
Newly formed Irwin Services Corporation has 100,000 shares of $10 par common stock authorized. On March 1, Year 1, Irwin Services issued 20,000 shares of the stock for $12 per share. On May 2, the
ALR Corporation had the following stock issued and outstanding at January 1, Year 1.1. 200,000 shares of $10 par common stock.2. 8,000 shares of $100 par, 4 percent, noncumulative preferred stock.On
When Ching Corporation was organized in January Year 1, it immediately issued 10,000 shares of $50 par, 5 percent, cumulative preferred stock and 15,000 shares of $10 par common stock. The
The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows:Requireda. Assuming the preferred stock was originally issued for cash, determine the amount of cash
Bronson Inc. has 300,000 shares authorized, 175,000 shares issued, and 25,000 shares of treasury stock. At this point, Bronson has $820,000 of assets. $250,000 liabilities, $400,000 of common stock,
D. Reed and J. Files started the RF partnership on January 1, Year 1. The business acquired $70,000 cash from Reed and $140,000 from Files. During Year 1, the partnership earned $75,000 in cash
A sole proprietorship was started on January 1, Year 1, when it received $30,000 cash from Maria Lopez, the owner. During Year 1, the company earned $50,000 in cash revenues and paid $22,300 in cash
The three primary types of business organization are proprietorship, partnership, and corporation.Each type has characteristics that distinguish it from the other types. In the left column of the
Choctaw Co. completed the following transactions in Year 1, the first year of operation.1. Issued 20,000 shares of $10 par common stock for $10 per share.2. Issued 3,000 shares of $20 stated value
Brice Co. completed the following transactions in Year 1, the first year of operation.1. Issued 40,000 shares of no-par common stock for $10 per share.2. Issued 8,000 shares of $20 par, 6 percent,
The stockholders’ equity section of the balance sheet for Mann Equipment Co. at December 31, Year 1, is as follows:The market value per share of the common stock is $42, and the market value per
Sun Corporation received a charter that authorized the issuance of 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 5 percent cumulative preferred stock. Sun Corporation
The Corners Corporation experienced three events that affected its financial statements as shown below. Assume that the original issue (Entry 1) was for 400,000 shares, and the treasury stock was
Nowell Inc. had the following stock issued and outstanding at January 1, Year 1:1. 150,000 shares of no-par common stock.2. 30,000 shares of $50 par, 4 percent, cumulative preferred stock. (Dividends
Cascade Company was started on January 1, Year 1, when it acquired $60,000 cash from the owners. During Year 2, the company earned cash revenues of $35,000 and incurred cash expenses of $18,100. The
Lake Inc. and River Inc. reported net incomes of $800,000 and $1,000,000, respectively, for the most recent fiscal year. Both companies had 200,000 shares of common stock issued and outstanding. The
Discount Drugs (one of the three largest drug makers) just reported that its Year 2 third-quarter profits are essentially the same as the Year 1 third-quarter profits. In addition to this
On May 1, Year 1, Love Corporation declared a $50,000 cash dividend to be paid on May 31 to shareholders of record on May 15.RequiredRecord the events occurring on May 1, May 15, and May 31 in a
The following information pertains to JAE Corp. at January 1, Year 1:Common stock, $10 par, 20,000 shares authorized,2,000 shares issued and outstanding
Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 300,000 shares of $10 par common stock and 50,000 shares of 5 percent cumulative class A preferred stock. The class A stock
Newly formed S&J Iron Corporation has 50,000 shares of $10 par common stock authorized. On March 1, Year 1, S&J Iron issued 6,000 shares of the stock for $16 per share. On May 2, the company
Weaver Corporation had the following stock issued and outstanding at January 1, Year 1.1. 150,000 shares of $1 par common stock.2. 15,000 shares of $100 par, 6 percent, noncumulative preferred
When Crossett Corporation was organized in January Year 1, it immediately issued 4,000 shares of $50 par, 6 percent, cumulative preferred stock and 50,000 shares of $20 par common stock. Its earnings
The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows:Requireda. Assuming the preferred stock was originally issued for cash, determine the amount of cash
Enscoe Enterprises, Inc. (EEI) has 225,000 shares authorized, 150,000 shares issued, and 30,000 shares of treasury stock. At this point, EEI has $780,000 of assets. $180,000 liabilities, $360,000 of
Faith Busby and Jeremy Beatty started the B&B partnership on January 1, Year 1. The business acquired $44,000 cash from Busby and $66,000 from Beatty. During Year 1, the partnership earned
A sole proprietorship was started on January 1, Year 1, when it received $60,000 cash from Marlin Jones, the owner. During Year 1, the company earned $35,300 in cash revenues and paid $16,200 in cash
The three primary types of business organization are proprietorship, partnership, and corporation. Each type has characteristics that distinguish it from the other types. In the left column of
If Best Co. issued 10,000 shares of $20 par value common stock for $30 per share, what amount is recorded in the Common Stock account? What amount of cash is received?
Interest rates in the United States were at historic lows for much of the period from 2013 through 2016. The economy was slowly recovering from the recession of 2008 and 2009, and the Federal Reserve
Mack Company plans to invest $50,000 in land that will produce annual rent revenue equal to 15 percent of the investment, starting on January 1, Year 1. The revenue will be collected in cash at the
Bojangles?, Inc. operates Cajun-themed fast-food restaurants. As of December 25, 2016, Bojangles? had 309 company-operated restaurants and 404 domestic franchised restaurants located in 11 states,
Advance Auto Parts, Inc. is “. . . a leading automotive aftermarket parts provider in North America. . . . We were founded in 1929 as Advance Stores Company. . . . As of January 2, 2016 . . . we
Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B and use it to answer the following questions:Requireda. What was the average
On January 1, Year 1, Mason Corp. sold $100,000 of its own 6 percent, 10-year bonds. Interest is payable annually on December 31. The bonds were sold to yield an effective interest rate of 5 percent.
Show the effect of each of the following independent accounting events on the financial statements using a horizontal statements model like the following one. Use + for increase, − for decrease,
Whitten Company was started when it issued bonds with $300,000 face value on January 1, Year 1. The bonds were issued for cash at 103. Whitten uses the straight-line method of amortization. They had
During Year 1 and Year 2, Kale Co. completed the following transactions relating to its bond issue. The company’s fiscal year ends on December 31.Year 1Mar. 1 Issued $200,000 of eight-year, 6
White Co. was formed when it acquired cash from the issue of common stock. The company then issued bonds at a discount on January 1, Year 1. Interest is payable on December 31 with the first payment
Dame Co. issued $250,000 of 10-year, 6 percent, callable bonds on January 1, Year 1, with interest payable annually on December 31. The bonds were issued at their face amount. The bonds are callable
Mott Company has a line of credit with Bay Bank. Mott can borrow up to $400,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an
On January 1, Year 1, Kramer Co. borrowed cash from First City Bank by issuing a $90,000 face-value, three-year term note that had a 7 percent annual interest rate. The note is to be repaid by making
Cascade Industries has the following account balances:The company wishes to raise $50,000 in cash and is considering two financing options: Cascade can sell $50,000 of bonds payable, or it can issue
On January 1, Year 1, Wright and Associates issued bonds with a face value of $800,000, a stated rate of interest of 8 percent, and a 20-year term to maturity. Interest is payable in cash on
On January 1, Year 1, Reese Incorporated issued bonds with a face value of $120,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December
On January 1, Year 1, Omega Company issued bonds with a face value of $200,000, a stated rate of interest of 6 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of
On January 1, Year 1, Valley Enterprises issued bonds with a face value of $60,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December
On January 1, Year 1, Seaside Condo Association issued bonds with a face value of $250,000, a stated rate of interest of 8 percent, and a 10-year term to maturity. Interest is payable in cash on
On January 1, Year 1, Chen Company issued $300,000 of five-year, 6 percent bonds at 101. Interest is payable annually on December 31. The premium is amortized using the straight-line
Ramsey Company issued bonds of $300,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December
On January 1, Year 1, Files Co. issued $400,000 of five-year, 6 percent bonds at 97. Interest is payable annually on December 31. The discount is amortized using the straight-line method.Requireda.
Dixon Construction, Inc. issued $300,000 of 10-year, 6 percent bonds on July 1, Year 1, at 96. Interest is payable in cash semiannually on June 30 and December 31. Dixon uses the straight-line method
Frey Company issued bonds of $300,000 face value on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31,
Jupiter Co. issued bonds with a face value of $150,000 on January 1, Year 1. The bonds had a 6 percent stated rate of interest and a five-year term. The bonds were issued at face value.Requireda.
Tyler Co. issued $250,000 of 6 percent, 10-year, callable bonds on January 1, Year 1, at their face value. The call premium was 2 percent (bonds are callable at 102). Interest was payable annually on
On January 1, Year 1, Hazman Corp. issued $200,000 of 10-year, 6 percent bonds at their face value. Interest is payable on December 31 of each year with the first payment due December 31, Year
Pluto Company issued $300,000 of 20-year, 6 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Pluto immediately

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