ACC 211 Chapter 10-12
A company issued 8%, 15-year bonds with a par value of $450,000 that pay interest semiannually. The market rate on the date of issuance was 8%. The journal entry to record each semiannual interest payment is
debit Bond Interest Expense $18,000; credit Cash $18,000 (=450,000*.08*.5)
A company issued 80 shares of $100 par value common stock for $9,400 cash. The total amount of paid-in capital in excess of par is
$1,400 (= 9,400 - 80*100)
Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $39,500; net cash used in investing activities was $14,600 and net cash used in financing activities was $18,900. If the beginning cash balance is $7,300, what is the ending cash balance?
$13,300 (=39,500-14,600-18,900+7,300)
A company's income statement showed the following: net income, $128,000 and depreciation expense, $31,200. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $9,800; merchandise inventory increased $18,800; and accounts payable increased $3,800. Calculate the net cash provided or used by operating activities.
$154,000 (net cash provided by operating activities = net income + depreciation expense + decrease in AR - increase in merchandise inventory + increase in AP)
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $60,000 Accounts payable increased by 26,000 Accounts receivable decreased by 41,000 Inventories decreased by 13,000 Cash dividends paid 22,000 Depreciation expense 36,000 Net cash provided by operating activities was
$176,000 (= net income + depreciation expense + decrease in AR + decrease in inventories + increase in AP)
A company issued 5-year, 5% bonds with a par value of $91,000. The company received $88,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is
$2,480.30 (cash interest paid = 91,000*.05*.5; discount amortization = (91,000-88947)/(5*2); semiannual interest expense = cash interest paid + discount amortization)
Fargo Company's outstanding stock consists of 500 shares of noncumulative 4% preferred stock with a $10 par value and 3,100 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid year 1 $21,000 year 2 $4,000 year 3 $30,000 The amount of dividends paid to preferred and common shareholders in year 1 is
$200 preferred; $20,800 common (preferred dividends = 500*10*.04)
A company's board of directors votes to declare a cash dividend of $1.20 per share of common stock. The company has 24,000 shares authorized, 19,000 issued, and 18,500 shares outstanding. The total amount of the cash dividend is
$22,200 (cash dividend per share of common stock * shares outstanding)
The accountant for TI Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $176,000 Cash dividends declared for the year 56,000 Net income for the year 104,500 What is the ending balance for retained earnings?
$224,500 (=176,000-56,000+104,500)
A corporation declared and issued a 25% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings $730,000 Shares issued and outstanding 58,000 Market value per share $17 Par value per share $5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:
$246,500 (=.25*58,000*17)
A company issues 6% bonds with a par value of $130,000 at par on January 1. The market rate on the date of issuance was 5%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is
$3,900 (semiannual interest payment = par value*rate*.5)
On July 1, Shady Creek Resort borrowed $320,000 cash by signing a 10-year, 11.5% installment note requiring equal payments each June 30 of $55,480. What amount of interest expense will be included in the first annual payment?
$36,800 (= par value*rate)
Alfredo Inc. reports net income of $239,000 for the year ended December 31. It also reports $91,600 depreciation expense and a $5,450 gain on the sale of equipment. Its comparative balance sheet reveals a $37,300 decrease in accounts receivable, a $16,650 increase in accounts payable, and a $13,100 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
$366,000 ($239,000 + $91,600 + $37,300 + $16,650 − $13,100 − $5,450 = $366,000)
On January 1, a company issued and sold a $420,000, 3%, 10-year bond payable, and received proceeds of $415,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the second interest payment is
$415,500 (discount amortized = ($420,000 − $415,000)/20 = $250; carrying value = $420,000 bond payable less $4,500 unamortized discount ($5,000 − (2 × $250)))
A corporation issued 8% bonds with a par value of $1,160,000, receiving a $52,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation called the bonds at $1,148,400. The gain or loss on this retirement is
$42,800 gain (carrying value of bonds = par value + unamortized premium; carrying value - retirement price = neg loss/ pos gain)
A company had a beginning balance in retained earnings of $43,800. It had net income of $6,800 and declared and paid cash dividends of $5,825 in the current period. The ending balance in retained earnings equals
$44,775 (= beginning balance in RE + net income - cash dividends)
A company has bonds outstanding with a par value of $190,000. The unamortized premium on these bonds is $5,225. If the company retired these bonds at a call price of $188,100, the gain or loss on this retirement is:
$7,125 gain (carrying value of bonds = par value + unamortized premium; carrying value - retirement price = neg loss/pos gain)
Chang Industries has bonds outstanding with a par value of $224,000 and a carrying value of $239,000. If the company calls these bonds at a price of $231,000, the gain or loss on retirement is
$8,000 gain (= carrying value - retirement price)
Halverstein Company's outstanding stock consists of 10,500 shares of cumulative 5% preferred stock with a $10 par value and 4,500 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $0 Year 2 $9,000 Year 3 $39,000 The amount of dividends paid to preferred and common shareholders in Year 2 is
$9,000 preferred; $0 common (cumulative, so rolls over; 2*(10500*.05*10) > 9000, so the entire dividends in year 2 for preferred and none for common)
A machine with a cost of $174,000 and accumulated depreciation of $107,000 is sold for $57,600 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is
$9,400 (=$174,000-107,000-57,600)
Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income $87,200 Depreciation expense 13,900 Gain on sale of land 6,400 Increase in merchandise inventory 3,950 Increase in accounts payable 8,050
$98,800 (=87,200+13,900-6,400-3,950+8,050)
Charger Company's most recent balance sheet reports total assets of $31,347,000, total liabilities of $18,447,000 and total equity of $12,900,000. The debt to equity ratio for the period is (rounded to two decimals)
1.43 (debt to equity ratio = total liabilities/total equity)
A company had average total assets of $3,460,000, total cash flows of $2,400,000, cash flows from operations of $475,000, and cash flows from financing of $1,290,000. The cash flow on total assets ratio equals
13.73% (cash flow on total assets = cash flow from operations/ avg. total assets)
The following data were reported by a corporation: Authorized shares 25,000 Issued shares 20,000 Treasury shares 6,000 The number of outstanding shares is
14,000 (outstanding shares = issued shares - treasury shares)
A company reported that its bonds with a par value of $50,000 and a carrying value of $66,500 are retired for $71,400 cash, resulting in a loss of $4,900. The amount to be reported under cash flows from financing activities is
$(71,400)
A machine with a cost of $146,000 and accumulated depreciation of $93,000 is sold for $66,000 cash. The amount that should be reported in the operating activities section reported under the direct method is
$0
A company issued 90 shares of $100 par value common stock for $10,000 cash. The total amount of paid-in capital is
$10,000
Sweet Company's outstanding stock consists of 1,300 shares of noncumulative 3% preferred stock with a $100 par value and 10,300 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,300 Year 2 $6,600 Year 3 $33,500 The total amount of dividends paid to preferred and common shareholders over the three-year period is
$10,100 preferred; $32,300 common (year 1 = 2300; year 2 = 3900; year 3 = 3900; balance does not roll over since noncumulative)
A company issues 10%, 6-year bonds with a par value of $230,000 on January 1 at a price of $240,486, when the market rate of interest was 9%. The bonds pay interest semiannually. The amount of each semiannual interest payment is
$11,500 (semiannual interest payment = par value*rate*.5)
A company has 35,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $437,500, and the par value per common share is $10. The book value per share is
$12.50 (book value per common share = stockholder's equity applicable to common shares/ number of common shares outstanding; 437,500/35,000)
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 260 shares of its common stock on May 1 for $13,000. On July 1, it reissued 130 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
$130 ($13,000 / 260 shares = $50 cost per share; $52 sell - 50 cost = $2 per share; $2 * 130 shares = $260; $49 sell - 50 cost = -$1 per share; -$1 * 130 shares = -$130; $260+ (-130) = 130)
A company's income statement showed the following: net income, $127,000; depreciation expense, $36,500; and gain on sale of plant assets, $10,500. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $10,700; merchandise inventory increased $24,500; prepaid expenses increased $7,500; accounts payable increased $4,700. Calculate the net cash provided or used by operating activities
$136,400 (net cash provided by operating activities = net income + depreciation expense - gain on sale of plant assets + decrease in AR - increase in merchandise inventory - increase in prepaid expenses + increase in AP)
Sweet Company's outstanding stock consists of 1,200 shares of cumulative 4% preferred stock with a $100 par value and 10,200 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,200 Year 2 $6,200 Year 3 $33,000 The total amount of dividends paid to preferred and common shareholders over the three-year period is
$14,400 preferred; $27,000 common (cumulative so balance rolls over each year; (1200*.04*100)*3)
On January 1 of Year 1, Congo Express Airways issued $2,500,000 of 5% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,260,000 and the market rate of interest for similar bonds is 6%. The bond premium or discount is being amortized at a rate of $8,000 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
$141,000 (annual interest expense = 2*[(par value*rate*6/12) + amortization rate per six months])
Jordan's net income for the year ended December 31, Year 2 was $189,000. Information from Jordan's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $504,000 $453,600 Paid-in capital in excess of par 952,000 856,600 Retained earnings 692,000 585,600
$145,800 ([common stock year 2 - year 1] + [paid-in capital in excess of par year 2 - year 1])
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $76,000 Accounts payable increased by 20,400 Accounts receivable decreased by 27,400 Inventories increased by 9,800 Depreciation expense 37,200 Net cash provided by operating activities was
$151,200 (= net income + depreciation expense + decrease in AR - increase in inventories + increase in AP)
In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment $15,800 Purchase of equipment 163,000 Proceeds from the sale of equipment 144,000 Repayment of outstanding bonds 96,000 Purchase of treasury stock 71,000 Issuance of common stock 105,000 Purchase of land 133,000 Increase in accounts receivable during the year 52,000 Decrease in accounts payable during the year 84,000 Payment of cash dividends 44,000 Net cash flows from investing activities for the year were
$152,000 of net cash used (= -purchase of equipment - purchase of land + proceeds from sale of equipment)
Barclays Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $323,000 Cash dividends declared for the year 72,500 Proceeds from the sale of equipment 124,600 Gain on the sale of equipment 7,200 Cash dividends payable at the beginning of the year 31,900 Cash dividends payable at the end of the year 39,000 Net income for the year 159,500 The amount of cash paid for dividends was
$65,400 ($72,500 + $31,900 − $39,000 = $65,400)
Use the following information to calculate cash received from dividends: Dividends revenue $74,500 Dividends receivable, January 1 6,900 Dividends receivable, December 31 5,300
$76,100 (=74,500+6,900-5,300)
Bagrov Corporation had a net decrease in cash of $17,500 for the current year. Net cash used in investing activities was $59,500 and net cash used in financing activities was $45,500. What amount of cash was provided (used) in operating activities?
$87,500 provided (=59,500+45,500-17,500)
Salah's net income for the year ended December 31, Year 2 was $200,000. Information from Salah's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $515,000 $463,500 Paid-in capital in excess of par 963,000 866,500 Retained earnings 703,000 595,500
$92,500 ($595,500 + $200,000 − $703,000 = $92,500)
A company has earnings per share of $9.30. Its dividend per share is $1.20, its market price per share is $113.46, and its book value per share is $89. Its price-earnings ratio equals
12.2 (price-earnings ratio = market value per share/earnings per share; 113.46/9.3)
On January 1 of Year 1, Congo Express Airways issued $4,800,000 of 7%, bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $4,404,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized using the straight-line method at a rate of $11,000 every 6 months. The life of these bonds is:
18 years (annual discount amortization = $22,000 ($11,000 × 2); bond discount = $4,800,000 − $4,404,000 = $396,000; discount/amortization = life of bonds ($396,000/$22,000 = 18 years))
A company has net income of $860,000; its weighted-average common shares outstanding are 172,000. Its dividend per share is $1.35, its market price per share is $106, and its book value per share is $103.00. Its price-earnings ratio equals
21.20 (price-earnings ratio = market value per share/earnings per share; earnings per share = net income/shares = 860,000/172,000 = 5)
The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 12,000 shares authorized and 6,000 shares issued, 2,800 shares outstanding $60,000 Paid-in capital in excess of par value, common stock 42,000 Retained earnings 17,000 Treasury stock 29,680 Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is
3,200 (issued shares − outstanding shares = treasury shares)
A company paid $0.88 in cash dividends per share. Its earnings per share is $4.60 and its market price per share is $25.00. Its dividend yield equals
3.52% (divident yield = annual cash dividend per share/ market value per share; .88/25)
A company had net cash flows from operations of $144,000, cash flows from financing of $378,000, total cash flows of $572,000, and average total assets of $3,940,000. The cash flow on total assets ratio equals
3.7% (cash flow on total assets = cash flow from operations/ avg. total assets)
Mayan Company had net income of $35,670. The weighted-average common shares outstanding were 8,700. The company declared a $3,400 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is
3.71 (basic earnings per share = (net income - preferred stock dividends)/weighted average common shares outstanding)
Adonis Corporation issued 10-year, 11% bonds with a par value of $170,000. Interest is paid semiannually. The market rate on the issue date was 10%. Adonis received $180,595 in cash proceeds. Which of the following statements is true?
Adonis must pay $170,000 at maturity plus 20 interest payments of $9,350 each (interest payments = 170,000*.11*.5)
On January 1, a company issues bonds dated January 1 with a par value of $230,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $239,811. The journal entry to record the issuance of the bond is
Debit Cash $239,811; credit Premium on Bonds Payable $9,811; credit Bonds Payable $230,000
Fetzer Company declared a $0.35 per share cash dividend. The company has 400,000 shares authorized, 380,000 shares issued, and 16,000 shares in treasury stock. The journal entry to record the payment of the dividend is
Debit Common Dividends Payable $127,400; credit Cash $127,400 (127,400 = .35*380,000 - .35*16,000)
On January 1, a company issues bonds dated January 1 with a par value of $310,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 12% and the bonds are sold for $298,594. The journal entry to record the first interest payment using straight-line amortization is
Debit Interest Expense $18,190.60; credit Discount on Bonds Payable $1,140.60; credit Cash $17,050.00
On July 1, Shady Creek Resort borrowed $270,000 cash by signing a 10-year, 9% installment note requiring equal payments each June 30 of $42,071. What is the journal entry to record the first annual payment?
Debit Interest Expense $24,300; debit Notes Payable $17,771; credit Cash $42,071 (24,300 = 270,000*.09)
On January 1, Year 1, Stratton Company borrowed $260,000 on a 10-year, 10% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $42,314 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is
Debit Interest Expense $24,369; debit Notes Payable $17,945; credit Cash $42,314 (Year 1 - Interest expense = $260,000 × 10% = $26,000; principal payment = $42,314 − $26,000 = $16,314; Year 2 - Interest expense = ($260,000 − $16,314) × 10% = $24,369; principal payment = $42,314 − $24,369 = $17,945)
Fetzer Company declared a $0.15 per share cash dividend. The company has 320,000 shares authorized, 304,000 shares issued, and 12,800 shares in treasury stock. The journal entry to record the dividend declaration is
Debit Retained Earnings $43,680; credit Common Dividends Payable $43,680 (43,680 = .15*304,000 - .15*12,800)
On September 1, Ziegler Corporation had 74,000 shares of $5 par value common stock, and $222,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is
No entry is made for this transaction
A corporation issued 180 shares of its $5 par value common stock in payment of a $2,600 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include
a $1,700 credit to Paid-in Capital in Excess of Par Value, Common Stock
James Company has 2,800 shares of $100 par preferred stock, which were issued at par. It also has 17,000 shares of common stock outstanding, and its total stockholders' equity equals $582,600. The book value per common share is
$17.80 (book value per common share = stockholder's equity applicable to common shares/ number of common shares outstanding; stockholder's equity applicable to common shares = 582,600 - 2,800*100)
The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $130,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 7,800 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 24,800 Net income for the year 96,000 What is the ending balance for retained earnings?
$176,000 (ending balance = beginning balance + net income for the year - cash dividends declared)
A corporation sold 12,500 shares of its $10 par value common stock at a cash price of $12 per share. The entry to record this transaction would include
credit to Common Stock for $125,000
On January 1, a company issues bonds dated January 1 with a par value of $360,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $374,613. The journal entry to record the first interest payment using straight-line amortization is: (Rounded to the nearest dollar.)
debit Bond Interest Expense $14,739; debit Premium on Bonds Payable $1,461; credit Cash $16,200 (cash payment = $360,000 × 0.09 × ½ = $16,200; premium amortization = $374,613 − $360,000 = $14,613/10 = $1,461; interest expense = $360,000 × 0.09 × ½ = $16,200 − $1,461 = $14,739)
On January 1, a company issued and sold a $395,000, 8%, 10-year bond payable, and received proceeds of $390,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is
debit Bond Interest Expense $16,050; credit Cash $15,800; credit Discount on Bonds Payable $250 (cash = $395,000 × .08 × 1/2 = $15,800; discount amortized = ($395,000 − $390,000)/20 = $250; interest expense = $15,800 + $250 = $16,050))
On January 1, Parson Freight Company issues 8.5%, 10-year bonds with a par value of $3,300,000. The bonds pay interest semiannually. The market rate of interest is 9.5% and the bond selling price was $3,075,762. The bond issuance should be recorded as
debit Cash $3,075,762; debit Discount on Bonds Payable $224,238; credit Bonds Payable $3,300,000
On January 1, a company issues bonds dated January 1 with a par value of $340,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 12% and the bonds are sold for $327,490. The journal entry to record the issuance of the bond is
debit Cash $327,490; debit Discount on Bonds Payable $12,510; credit Bonds Payable $340,000
On January 1, a company issues bonds dated January 1 with a par value of $790,000. The bonds mature in 3 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $781,000. The journal entry to record the first interest payment using straight-line amortization is
debit Interest Expense $41,000; credit Discount on Bonds Payable $1,500; credit Cash $39,500
A corporation issued 6,600 shares of $10 par value common stock in exchange for some land with a market value of $102,000. The entry to record this exchange is
debit Land $102,000; credit Common Stock $66,000; credit Paid-In Capital in Excess of Par Value, Common Stock $36,000
Global Corporation had 57,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 15% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is
debit Retained Earnings $230,850; credit Common Stock Dividend Distributable $171,000; credit Paid-In Capital in Excess of Par Value, Common Stock $59,850
Eastline Corporation had 16,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 5,445 shares. At the time of the stock dividend, the market value per share was $15. The entry to record this dividend is
debit Retained Earnings $27,225; credit Common Stock Dividend Distributable $27,225 (=5,445*5)
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 24,000 shares authorized, 11,400 shares issued, and 9,600 shares of common stock outstanding. The journal entry to record the dividend declaration is
debit Retained Earnings $4,800; credit Common Dividends Payable $4,800 (per cash dividend * shares of common stock outstanding)
On January 1, $396,000 of par value bonds with a carrying value of $430,000 is converted to 66,000 shares of $5 par value common stock. The entry to record the conversion of the bonds includes all of the following entries except
debit to Bonds Payable $430,000
On August 1, a $31,200, 7%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $11,888.81. The entry to record the first payment on July 31 would include
debit to Interest Expense of $2,184.00 (= par value*rate)
Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 240 shares to its attorneys in payment of a $4,400 charge for drawing up the articles of incorporation. The entry to record this transaction would include
debit to Organization Expenses for $4,400
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $53,500 Accounts payable decreased by 19,500 Accounts receivable increased by 26,500 Inventories increased by 6,500 Cash dividends paid 14,300 Depreciation expense 21,500 Net cash provided by operating activities was
$22,500 (= net income + depreciation expense - increase in AR - increase in inventories - decrease in AP)
Favre Company reports depreciation expense of $46,000 for Year 2. Also, equipment costing $158,000 was sold for a $10,600 loss in Year 2. The following selected information is available for Favre Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $640,000 $798,000 Accumulated Depreciation-Equipment 452,000 530,000
$23,400 (Accumulated depreciation on equipment sold = $530,000 + $46,000 − $452,000 = $124,000; Cash received = ($158,000 − $124,000) − $10,600 = $23,400))
On January 1 of Year 1, Congo Express Airways issued $3,250,000 of 5% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,930,000 and the market rate of interest for similar bonds is 6%. The bond premium or discount is being amortized at a rate of $10,667 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of
$3,032,584. (discount on bonds payable = par value - issue value; year one amortization = amortization rate*2; unamortized discount = discount on bonds payable - year one amortization; carrying value of bonds = par value - unamortized discount; interest accrual = par value* rate*.5; total liabilities = carrying value of bonds + interest accrual)
Clabber Company has bonds outstanding with a par value of $116,000 and a carrying value of $106,900. If the company calls these bonds at a price of $103,000, the gain or loss on retirement is
$3,900 gain (= carrying value - retirement price)
A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,900. The company calls these bonds at a price of $99,000 the gain or loss on retirement is
$3,900 loss (carrying value of bonds = par value - unamortized discount; carrying value - retirement price = neg loss/pos gain)
Mayan Company had net income of $32,830. The weighted-average common shares outstanding were 9,800. The company has no preferred stock. The company's earnings per share is
$3.35 (basic earnings per share = (net income - preferred stock dividends)/weighted average common shares outstanding; here, preferred stock dividends = 0)
A company issued 6-year, 8% bonds with a par value of $850,000. The market rate when the bonds were issued was 7.5%. The company received $858,500 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is
$33,292 (cash interest paid: $850,000 × .08 × ½ year = $34,000; premium amortized: ($858,500 − $850,000)/12 = $708; interest expense: $34,000 − $708 = $33,292)
A company has 850 shares of $64 par value preferred stock outstanding. It also has 16,000 shares of common stock outstanding, and the total value of its stockholders' equity is $596,800. The company's book value per common share equals
$33.90 (book value per common share = stockholder's equity applicable to common shares/ number of common shares outstanding; stockholder's equity applicable to common shares = 596,800 - 850*64)
Morgan Company issues 10%, 20-year bonds with a par value of $690,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.
$34,500 (= 690,000*.1*.5; .5 is the part of a year)
Use the following information to calculate cash received from dividends: Dividends revenue $37,800 Dividends receivable, January 1 4,200 Dividends receivable, December 31 6,600
$35,400 (=37,800+4,200-6,600)
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $62,000 Accounts payable decreased by 23,000 Accounts receivable increased by 30,000 Inventories increased by 10,000 Depreciation expense 40,000 Net cash provided by operating activities was
$39,000 (= net income + depreciation expense - increase in AR - increase in inventories - decrease in AP)
Analysis reveals that a company had a net increase in cash of $22,200 for the current year. Net cash provided by operating activities was $20,000; net cash used in investing activities was $11,000 and net cash provided by financing activities was $13,200. If the year-end cash balance is $27,000, the beginning cash balance was
$4,800 (=27,000-13,200+11,000-20,000)
Alvarez Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $323,000 Cash dividends declared for the year 72,500 Proceeds from the sale of equipment 124,600 Gain on the sale of equipment 7,200 Cash dividends payable at the beginning of the year 31,900 Cash dividends payable at the end of the year 39,000 Net income for the year 159,500 The ending balance in retained earnings is
$410,000 ($323,000 + $159,500 − $72,500 = $410,000)
A machine with a cost of $140,000, accumulated depreciation of $90,000, and current year depreciation expense of $19,500 is sold for $44,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is
$44,000
Ford Company reports depreciation expense of $56,000 for Year 2. Also, equipment costing $189,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Ford Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $690,000 $879,000 Accumulated Depreciation-Equipment 493,000 580,000
$46,000 (Accumulated depreciation on equipment sold = $580,000 + $56,000 − $493,000 = $143,000; Cash received = $189,000 − $143,000 = $46,000))
Green Company reports depreciation expense of $53,000 for Year 2. Also, equipment costing $179,000 was sold for a $6,300 gain in Year 2. The following selected information is available for Green Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment $675,000 $854,000 Accumulated Depreciation-Equipment 480,000 565,000
$47,300 (Accumulated depreciation on equipment sold = $565,000 + $53,000 − $480,000 = $138,000Cash received = ($179,000 − $138,000) + $6,300 = $47,300))
On January 1, a company issued and sold a $480,000, 5%, 10-year bond payable, and received proceeds of $473,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the first interest payment is
$473,350 (discount amortized = ($480,000 - $473,000)/(2*10) = $350; carrying value = $480,000 bond payable less $6,650 unamortized discount ($7,000 − $350))
The accountant for Walter Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $135,000 Cash dividends declared for the year 55,000 Proceeds from the sale of equipment 90,000 Gain on the sale of equipment 8,800 Cash dividends payable at the beginning of the year 27,000 Cash dividends payable at the end of the year 30,800 Net income for the year 101,000 The amount of cash dividends paid during the year would be
$51,200 (cash dividend paid during the year = cash dividend declared during the year + cash dividend payable, beginning - cash dividend payable, end)
The accountant for Sysco Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $959,000 Net income for the year 300,000 Cash dividends declared for the year 56,000 Retained earnings balance at the end of the year 1,427,000 Cash dividends payable at the beginning of the year 12,800 Cash dividends payable at the end of the year 15,200 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?
$53,600 (cash dividend paid = cash dividend declared + cash dividend payable, beginning - cash dividend payable, end)
A machine with a cost of $145,000 and accumulated depreciation of $100,000 is sold for $57,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is
$57,500
Sweet Company's outstanding stock consists of 1,100 shares of cumulative 5% preferred stock with a $100 par value and 11,100 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $3,100 Year 2 $7,100 Year 3 $37,500 The amount of dividends paid to preferred and common shareholders in year 3 is
$6,300 preferred; $31,200 common (preferred annual dividends = 1100*100*.05 = 5500; 5500-3100 = 2400; 5500+2400-7100 = 800; year 3 preferred dividends = 5500 + 800 = 6300)
Ultimate Sportswear has $280,000 of 7% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $680,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $48,000. This dividend should be distributed as follows
$19,600 preferred; $28,400 common (pay all of preferred first, then what remains goes to common)
Torino Company has 3,000 shares of $10 par value, 7.5% cumulative and nonparticipating preferred stock and 30,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $2,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is
$2,500 (3,000*10*.075 = 2,250 annual preferred dividends; 2,250 - 2000 (first year dividents) = 250; 2,250 (second year dividends) + 250 (remainder) = 2,500)
Mayweather reports net income of $315,000 for the year ended December 31. It also reports $98,900 depreciation expense and a $10,600 loss on the sale of equipment. Its comparative balance sheet reveals a $42,600 increase in accounts receivable, a $10,800 decrease in prepaid expenses, a $16,200 increase in accounts payable, a $13,300 decrease in wages payable, a $79,400 increase in equipment, and a $106,000 decrease in notes payable. Calculate the net increase in cash for the year.
$210,200 ($315,000 + $98,900 + $10,600 + $10,800 + $16,200 − $42,600 − $13,300 = $395,600; $395,600 − $79,400 − $106,000 = $210,200)