chapter 12-
On January 1, 2019, Burton Sales issued $21,000 in bonds for$29,800. These are eightminus−year bonds with a stated rate of 99% and pay semiannual interest. Burton Sales uses the straightminus−line method to amortize the bond premium. Immediately after the issue of the bonds, the ledger balances are as follows: Bonds Payable 21,000 Premium on Bonds Payable 8,800 After the first interest payment on June 30, 2019, what is the balance of Premium on Bonds Payable? (Round your intermediate answers to the nearest dollar.
credit of 8250
O'Malley, Inc. issued 70,000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of $1,230,000. The stock has a par value of $0.01 per share. The journal entry to record this transaction includes a ________.
credit to Paidminus−In Capital in Excess of Parlong dash—Common for $ 1 ,229 ,300
Preferred stockholders ________.
receive a dividend preference over common stockholders
Connecticut, Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Connecticut, Inc. Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Increase / (Decrease) Cash $22,000 $21,000 $1,000 Accounts Receivable 31,000 37,000 (6,000) Merchandise Inventory 55,000 26,000 29,000 Plant and Equipment 124,000 92,000 32,000 Accumulated Depreciationminus−Plant and Equipment (48,000) (44,000) (4,000) Total Assets $184,000 $132,000 $52,000
$(18,000)
Arkansas Corp. is preparing its statement of cash flows using the indirect method. It provides the following information about transactions for the year: Plant assets, netlong dash—beginning balance: $110,000 Plant assets, netlong dash—ending balance: $148,000 Equipment was purchased for $63,000 with cash. Equipment with a net asset value of $12,000 was sold for $16,800. Depreciation Expense of $15,000 was recorded during the year. What was the amount of net cash provided by (used for) investing activities?
$(46,200)
On January 1, 2018, Waller Sales issued $ $19,000 in bonds for $ 15 $15,300. These are eightminus−year bonds with a stated rate of 1111%, and pay semiannual interest. Waller Sales uses the straightminus−line method to amortize the bond discount. After the second interest payment on December 31, 2018, what is the bond carrying amount? (Round your intermediate answers to the nearest cent, and your final answer to the nearest dollar.)
$15,763
Adventure Travel signed a 1111%, 1010minus−year note for $158,000. The company paid an installment of $2,800 for the first month. After the first payment, what is the principal balance? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
$156,648
On July 1, 2018, Electrical Services issued $40,000 of 1212% bonds that mature in five years. The bonds were issued at a premium, for a total of $41,800. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2018, what is the total amount paid to bondholders?
$2,400
The following information is from the December 31, 2018 balance sheet of Millner Corporation. Preferred Stock, $100 par $550,000 Paidminus−In Capital in Excess of Parlong dash—Preferred 41,000 Common Stock, $1 par 270,000 Paidminus−In Capital in Excess of Parlong dash—Common 570,000 Retained Earnings 171,500 Total Stockholders' Equity $1,602,500 What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)
$3.11
The following information is from the December 31, 2018 balance sheet of Millner Corporation. Preferred Stock, $100 par $560,000 Paid-In Capital in Excess of Parlong dash—Preferred 43,000 Common Stock, $1 par 190,000 Paid-In Capital in Excess of Parlong dash—Common 510,000 Retained Earnings 191,500 Total Stockholders' Equity $1,494,500 ' What was the average issue price of the common stock shares? (Round your answer to the nearest cent.)
$3.68
On March 31, 2018, Water Front, Inc. shows the following data on its balance sheet: Stockholders' Equity Common Stock, $1.00 Par, 1 1,160,000 shares authorized 210,000 shares issued, 190,000 shares outstanding $210,000 Paidminus−In Capital in Excess of Parlong dash—Common ,570,000 Retained Earnings ,760,000 Treasury stock,15,000 shares at $38.00 (570,000) Total Stockholder's Equity $6,970,000 Assume that Water Front sells 1,400 shares of treasury stock at $34.00 per share. What is total stockholders' equity after this transaction?
$7,017,600
chapter 14 August, Inc. had the following transactions in 2018, its first year of operations: bullet• Issued 28,000 shares of common stock. The stock has par value of $4.00 per share and was issued at $19.00 per share. bullet• Issued 1,100 shares of $130.00 par value preferred stock at par. bullet• Earned net income of $36,000. bullet• Paid no dividends. At the end of 2018, what is total stockholders' equity?
$711,000
The face value is $ 84 comma 000$84,000, the stated rate is 1010%, and the term of the bond is eight years. The bond pays interest semiannually. At the time of issue, the market rate is 88%. What is the present value of the bond at the issue date? Present value of $1: 4% 5% 6% 7% 8% 15 0.555 0.481 0.417 0.362 0.315 16 0.534 0.458 0.394 0.339 0.292 17 0.513 0.436 0.371 0.317 0.270 18 0.494 0.416 0.350 0.296 0.250 19 0.475 0.396 0.331 0.277 0.232
$93,794
Outdoor Lighting Supply expects the following for 2018: Net cash provided by operating activities of $280,000 Net cash provided by financing activities of $63,000 Net cash provided by investing activities of $79,000 Cash dividends paid to stockholders of $20,000 Outdoor expects to spend $154,000 to modernize its showroom. How much free cash flow does Outdoor expect for 2018?
106,000
Healthy Farmer, Inc. has 43,000 shares of common stock outstanding and 10,000 shares of preferred stock outstanding. The common stock is $0.10 par value; the preferred stock is 44% noncumulative with a $100.00 par value. On October 15, 2019, the company declares a total dividend payment of $53,000. What is the total amount of dividends that will be paid to the common stockholders?
13,000
Daniel Corporation had net income for 2018 of $74,000. Daniel had 14,000 shares of common stock outstanding at the beginning of the year and 18,000 shares of common stock outstanding at the end of the year. There were 11,000 shares of preferred stock outstanding all year. During 2018, Daniel declared and paid preferred dividends of $25,000. On December 31, 2018, the market price of Daniel's common stock is $42.00 per share and the market price of its preferred stock is $69.00 per share. What is Daniel's price/earnings ratio at December 31, 2018? (Round any intermediate calculations and your final answer to the nearest cent.)
13.73
On November 1, 2018, Cleveland Services issued $ 306,000 of fiveminus−year bonds with a stated rate of 1515%. The bonds were issued at par, and Cleveland makes semiannual payments on April 30 and October 31. On December 31, 2018, Cleveland made an adjusting entry to accrue interest at yearminus−end. No further entries were made until April 30, 2019, when the first payment was made. What amount of interest expense was recorded for the period of January 1 to April 30, 2019? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
15,300
New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: New Orleans Chemicals Company Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Increase/ (Decrease) Common Stock $30,000 $2,300 $27,700 Retained Earnings 158,000 91,000 67,000 Treasury Stock (8,400) (5,500) (2,900) Total Equity $179,600 $87,800 $91,800
22,000
Scotland Corporation had net income for 2018 of 77,000. Scotland had 6,000 shares of common stock outstanding at the beginning of the year and 28,000 shares of common stock outstanding at the end of the year. There were 11,000 shares of preferred stock outstanding all year. During 2018, Scotland declared and paid preferred dividends of $22,000. What is Scotland's earnings per share? (Round the answer to two decimal places.)
3.24
chapter 12 Alden Corp. has the following balances as of December 31, 2019: Total Assets $ 93 ,000$93,000 Total Liabilities 73,000 73,000 Total Equity 20,000 20,000 Calculate the debt to equity ratio. (Round your answer to two decimal points.)
3.65
Refer to the following list of liability balances at December 31, 2018. Accounts Payable $22,000 Employee Health Insurance Payable 1,450 Employee Income Tax Payable 400 Estimated Warranty Payable (Due 2019) 1,200 Longminus−Term Notes Payable (Due 2022) 37,000 FICAlong dash—OASDI Taxes Payable 1,560 Sales Tax Payable 1,270 Mortgage Payable (Due 2023) 7,000 Bonds Payable (Due 2024) 53,000 Current Portion of Long-Term Notes Payable 7,500 What is the total amount of current liabilities?
35,380
The 2019 balance sheet for Standard Electronics reported the following items long dash— with 2018 figures given for comparison: Standard Electronics Balance Sheet As of December 31, 2019 Standard Electronics Balance Sheet As of December 31, 2018 Total Assets $570,000 $484,000 Total Liabilities 322,000 275,000 Total Stockholders' Equity (all common) 248,000 209,000 Total Liabilities and Stockholders' Equity $570,000 $484,000 Net income for 2019 was $18,000. Compute the rate of return on common stockholders' equity for 2019. (Round your final answer to two decimal places.)
7.88
Refer to the following list of liability balances at December 31, 2019. Accounts Payable $24,000 Employee Health Insurance Payable 1,350 Employee Income Tax Payable 400 Estimated Warranty Payable (Due 2020) 900900 Longminus−Term Notes Payable (Due 2022) 33,000 FICAlong dash—OASDI Taxes Payable 1,560 Sales Tax Payable 370370 Mortgage Payable (Due 2023) 9,000 Bonds Payable (Due 2024) 57,000 Current Portion of Longminus−Term Notes Payable 5,500 What is the total amount of longminus−term liabilities?
99,000
Which of the following statements is true?
Appropriations of retained earnings require journal entries, but restrictions on retained earnings are usually reported in notes to the financial statements.
On March 1, 2018, Lewis Services issued a 88% longminus−term notes payable for $ 18 comma 000$18,000. It is payable over a 33minus−year term in $ 6 comma 000$6,000 principal installments on March 1 of each year, beginning March 1, 2019. Which of the following entries needs to be made on March 1, 2018?
Cash 18,000 Notes Payable 18,000
Why would a corporation issue bonds payable instead of issuing stock?
Debt is a less expensive source of capital than stock.
On January 1, 2019, Agree Company issued $73,000 of fiveminus−year, 88% bonds when the market interest rate was 1212%. The issue price of the bonds was 1$68,401. Agree uses the effectiveminus−interest method of amortization for bond discount. Semiannual interest payments are made on June 30 and December 31 of each year. Which of the following is the correct journal entry to record the first interest payment? (Round all amounts to the nearest whole dollar.)
Interest Expense 44,104 Discount on Bonds Payable 1,184 Cash 2,920
Which of the following is true of the statement of cash flows?
It covers a span of time and is dated the same as the income statement.
chapter 13 Which of the following is true of the Premium on Bonds Payable account? (The bonds are due in ten years.)
It is added to the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
Which of the following statements accurately describes the statement of cash flows?
It is the link between the accrual-based income statement and the cash reported on the balance sheet.
Which of the following describes the operating activities section of the statement of cash flows?
It reports on activities that create revenue or expenses for the entity's business.
chapter 13 Which of the following is true of a stock split and a stock dividend?
Neither a stock split nor a stock dividend will increase total stockholders' equity.
Arkansas Company is preparing its statement of cash flows using the indirect method. Refer to the following information: 1. Repayments on Longminus−term Notes Payable $63,000 2. New borrowing on Longminus−term Notes Payable $23,000 Which of the following statements is correct?
Net cash used for financing activities is $(40,000).
A company originally issued 12,000 shares of $ $8.00 par value common stock at $19.00 per share. The board of directors declares a 88% stock dividend when the market price of the stock is $22.00 a share. Which of the following is included in the entry to record the declaration of a stock dividend?
Stock Dividends is debited for $21,120.
Refer to the following information for Tolan Corporation: bullet• Common Stock, $ 1.00$1.00 par,110,000 shares issued,96,000 shares outstanding bullet• Paidminus−In Capital in Excess of Parlong dash—Common: $2,350,000 bullet• Retained Earnings:$990,000 bullet• Treasury Stock: 14,000 shares purchased at $20.00 per share If Tolan resold 2,000 shares of treasury stock for $15.50 per share, which of the following statements would be true?
The Treasury Stock account would decrease by $40,000
Which of the following statements is true of a bond that is issued at a discount?
The bond will be issued for an amount less than the face value.
Illinois Woodworking Company is preparing its statement of cash flows using the indirect method. During the year, Illinois Woodworking sold equipment for $6,990 cash. The net book value of the asset was $4,770. Which of the following statements is true?
The cash receipt of $6,990 is shown as a positive cash flow in the investing activities section.
Atlantis Corporation has 17,000 shares of 1313%, $80.00 par noncumulative preferred stock outstanding and 24,000 shares of nominus−par common stock outstanding. At the end of the current year, the corporation declares a dividend of $200,000. How is the dividend allocated between preferred and common stockholders?
The dividend is allocated $176,800 to preferred stockholders and $23,200 to common stockholders.
Which of the following occurs when the board of directors declares a 33−for−1 stock split on 12,000 outstanding shares of $24.00 par common stock?
The number of outstanding shares increases to 36,000.
A corporation originally issued $8.00 par value common stock for $13.00 per share. It purchased the stock for $18.00 per share. Which of the following is included in the entry to record the sale of 4040 shares of treasury stock for $19.00 per share?
Treasury Stocklong dash—Common is credited for $720.
Land Corporation reported the following: Common Stock, $5.00 par, 204,000 shares authorized,180,000 shares issued $900,000 Paid in Capital in Excess of Parlong dash—Common 217,000 Retained Earnings 219,000 Total Stockholders' Equity $1,336,000 Which of the following is included in the entry to record the corporation's purchase of 40,000 shares of its common stock for $15.50 per share?
Treasury Stocklong dash—Common is debited for $620,000.
Which of the following describes a serial bond?
a bond that matures in installments at regular intervals
The activities that are included in the operating activities section of the statement of cash flows are ________.
activities that create revenue or expenses
Outstanding stock represents shares of stock that ________.
are held by the stockholders
Colorado Company uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Colorado Company Comparative Balance Sheet December 31, 2019 and 2018 2019 2018 Increase/(Decrease) Accounts Payable $4,000 $6,000 $(2,000) Accrued Liabilities 2,000 1,000 1,000 Long-term Notes Payable 84,000 90,000 (6,000) Total Liabilities $90,000 $97,000 $(7,000) How will the change in Accrued Liabilities be shown on the statement of cash flows?
as an addition to Net Income
Great Lake Glassware Company issues $1,114,000 of its 1111%, 10minus−year bonds at 9999 on February 28, 2018. The bonds pay interest on February 28 and August 31. Assume that Great Lake uses the straightminus−line method for amortization. The journal entry to record the first interest payment on August 31, 2018 includes a ________.
debit to Interest Expense for $61,827
The distribution of a stock dividend ________.
effects only stockholder's equity accounts
Trinity Coatings Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2018: The beginning balance in the Cash account was $2,900. Net cash provided by operating activities: $39,000 Net cash used for investing activities: $(26,000) Net cash provided by financing activities: $1,400 The statement of cash flows will show ________.
ending cash of $17,300
Investors who want to know the amount of cash a company has available for new opportunities, such as expanding into a new sales region, should analyze the company's ________.
free cash flow
in preparing a statement of cash flows using the indirect method, the Depreciation Expense ________.
is added back as an adjustment to Net Income in the operating activities section
The debt to equity ratio of four companies is given below. Debt to equity ratio Lewis, Inc. 1.30 Jackson, Inc. 1.50 Jones Corp. 0.88 Roberts Corp. 0.92 Which of the following companies has the greatest financial risk?
jackson
Which of the following will be shown under the investing activities section of the statement of cash flows?
loaned money to a third party
On July 1, 2019, Montana Company has bonds with balances as shown below. Bonds Payable 71 ,000 Discount on Bonds Payable 3,300 If the company retires the bonds for $ 73, 150, what will be the effect on the income statement?
loss on retirement of $ 5,450
Wisconsin, Inc. owed one of its creditors $350,000, but it did not have enough cash to repay the debt. Following lengthy negotiations, the parties agreed that Wisconsin, Inc. would issue 50,000 shares of common stock to settle the debt. On the statement of cash flows, this transaction is shown in the ________.
non-cash investing and financing activities section
Which of the following is a cash outflow for a financing activity on the statement of cash flows?
payment of dividends
On December 1, 2018, Garden Products borrowed $91,000 on a 66%, 1616minus−year note with annual installment payments of $5,688 plus interest due on December 1 of each subsequent year. Which of the following describes the first installment payment made on December 1, 2019? (Round your answer to the nearest whole number.)
principal plus $5,460 interest
Which of the following transactions would be shown in the non-cash investing and financing activities section of the statement of cash flows?
purchased a building in exchange for 20,000 shares of common stock
Which of the following transactions would be shown in the non-cash investing and financing activities section of the statement of cash flows?
purchased land by signing a 10-year note for $500,000
When bonds are retired at maturity ________.
the carrying value always equals the face value
The purchase of equipment financed by a long-term notes payable is an example of ________.
non-cash investing and financing activity
