At December 31, 2012, Reid Company had 600,000 shares of common stock issued and outstanding, 400,000 of which had been issued and outstanding throughout the year and 200,000 of which were issued on October 1, 2012. Net income for 2012 was $2,000,000, and dividends declared on preferred stock were $400,000. Compute Reid’s earnings per common share. (Round to the nearest penny.)
> Consider the bond investment by Lady Gaga in IFRS17-5. Discuss the accounting for this investment if Lady Gaga’s business model is to hold the investment to collect interest while outstanding and to receive the principal at maturity. In IFRS17-5 Lady Ga
> McElroy Company has the following portfolio of investment securities at September 30, 2012, its last reporting date. On October 10, 2012, the Horton shares were sold at a price of $54 per share. In addition, 3,000 shares of Patriot common stock were ac
> The following information is available for Kinney Company at December 31, 2012, regarding its investments. Instructions (a) Prepare the adjusting entry (if any) for 2012, assuming the securities are classified as trading. (b) Prepare the adjusting entr
> Use the information from BE17-5 but assume the stock was purchased as a trading security. Prepare Fairbanks’s journal entries to record (a) The purchase of the investment, (b) The dividends received, and (c) The fair value adjustment. In BE17-5 Fairbank
> When should a debt security be classified as held-to- maturity?
> Satchel Inc. purchases 10,000 shares of its own previously issued $10 par common stock for $290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this transaction have on (a) Net income, (b) Total assets, (c) Tota
> Kalin Corporation had 2012 net income of $1,000,000. During 2012, Kalin paid a dividend of $2 per share on 100,000 shares of preferred stock. During 2012, Kalin had outstanding 250,000 shares of common stock. Compute Kalin’s 2012 earnings per share.
> Sport Pro Magazine sold 12,000 annual subscriptions on August 1, 2012, for $18 each. Prepare Sport Pro’s August 1, 2012, journal entry and the December 31, 2012, annual adjusting entry.
> On February 1, 2013, one of the huge storage tanks of Viking Manufacturing Company exploded. Windows in houses and other buildings within a one-mile radius of the explosion were severely damaged, and a number of people were injured. As of February 15, 20
> Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2012, the corporation sells for cash 400 computers at a unit price of $2,500. O
> Matthewson Company began operations on January 2, 2012. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 paid sick days annually. Vacation days may be taken after January 15 of the year fo
> On July 1, 2013, Fontaine Company purchased for cash 40% of the outstanding capital stock of Knoblett Company. Both Fontaine Company and Knoblett Company have a December 31 year-end. Knoblett Company, whose common stock is actively traded in the over-the
> Parnevik Company has the following securities in its investment portfolio on December 31, 2012 (all securities were purchased in 2012): (1) 3,000 shares of Anderson Co. common stock which cost $58,500, (2) 10,000 shares of Munter Ltd. common stock which
> On January 1, 2012, Morgan Company acquires $300,000 of Nicklaus, Inc., 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature December 31, 2014. The investment will provide Morgan Company a 12% yield. The bonds a
> Lady Gaga Co. recently made an investment in the bonds issued by Chili Peppers Inc. Lady Gaga’s business model for this investment is to profit from trading in response to changes in market interest rates. How should this investment be classified by Lady
> For balance sheet purposes, can the fair value of a derivative in a loss position be netted against the fair value of a derivative in a gain position?
> List possible sources of additional paid-in capital.
> At December 31, 2012, Burr Corporation owes $500,000 on a note payable due February 15, 2013. (a) If Burr refinances the obligation by issuing a long-term note on February 14 and using the proceeds to pay off the note due February 15, how much of the $50
> On January 1, 2012 (the date of grant), Lutz Corporation issues 2,000 shares of restricted stock to its executives. The fair value of these shares is $75,000, and their par value is $10,000. The stock is forfeited if the executives do not complete 3 year
> Andretti Inc. issued $10,000,000 of short-term commercial paper during the year 2012 to finance construction of a plant. At December 31, 2012, the corporation’s yearend, Andretti intends to refinance the commercial paper by issuing long-term debt. Howeve
> Under what conditions must an employer accrue a liability for employees’ compensation for future absences?
> Under what conditions should a provision be recorded?
> Below is a payroll sheet for Otis Import Company for the month of September 2012. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal
> On December 31, 2012, Santana Company has $7,000,000 of short-term debt in the form of notes payable to Golden State Bank due in 2013. On January 28, 2013, Santana enters into a refinancing agreement with Golden that will permit it to borrow up to 60% of
> A company proposes to include in its SEC registration statement a balance sheet showing its subordinate debt as a portion of stockholders’ equity. Will the SEC allow this? Why or why not?
> The Financial Accounting Standards Board issued accounting guidance to clarify accounting methods and procedures with respect to certain debt and all equity securities. An important part of the statement concerns the distinction between held-to-maturity,
> Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. Instructions (a) Indicate whether the bonds were purchased at a discount or at a prem
> Where in the financial statements is preferred stock normally reported?
> Assume the same information as in E17-3 except that the securities are classified as available-for-sale. The fair value of the bonds at December 31 of each year-end is as follows. In E17-3 On January 1, 2011, Roosevelt Company purchased 12% bonds, havi
> Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks’ journal entries for (a) The purchase of the investm
> Refer to the data for Barwood Corporation in BE16-6. Repeat the requirements assuming that instead of options, Barwood granted 2,000 shares of restricted stock. In BE16-6 On January 1, 2012, Barwood Corporation granted 5,000 options to executives. Each
> Which types of investments are valued at amortized cost? Explain the rationale for this accounting.
> When would an investor discontinue applying the equity method in an investment? Are there any exceptions to this rule?
> Takemoto Corporation borrowed $60,000 on November 1, 2012, by signing a $61,350, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry.
> An important consideration in evaluating current liabilities is a company’s operating cycle. The operating cycle is the average time required to go from cash to cash in generating revenue. To determine the length of the operating cycle,
> What are three examples of estimates that are used in accounting that are not contingencies? Can you explain why they are not considered contingencies?
> Cedarville Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Assume that the federal income tax withheld is 10%
> On December 31, 2012, Alexander Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2013. On January 21, 2013, the company issued 25,000 shares of its common stock for $36 per share, receiving $900,000 proceeds after br
> Dagwood Inc. recently noted that its 4% preferred stock and 4% participating preferred stock, which are both cumulative, have priority as to dividends up to 4% of their par value. Its participating preferred stock participates equally with the common sto
> Describe how a company would classify debt that includes covenants. What conditions must exist in order to depart from the normal rule?
> Dumars Corporation reports in the current liability section of its balance sheet at December 31, 2012 (its year-end), short-term obligations of $15,000,000, which includes the current portion of 12% long-term debt in the amount of $10,000,000 (matures in
> Define a provision, and give three examples of a provision.
> On January 1, 2012, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock
> Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions. Instructions (Round all computations to the nearest dollar.) (a) Prepare e
> On January 1, 2011, Roosevelt Company purchased 12% bonds, having a maturity value of $500,000, for $537,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2011, and mature January 1, 2016, with interest receivable Dece
> Describe the two criteria for determining the valuation of financial assets.
> What is the cost of a long-term investment in bonds?
> What guidance does the SEC give for disclosures regarding accounting policies used for derivatives?
> Upland Company borrowed $40,000 on November 1, 2012, by signing a $40,000, 9%, 3-month note. Prepare Upland’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry.
> Assume that your friend Will Morris, who is a music major, asks you to define and discuss the nature of a liability. Assist him by preparing a definition of a liability and by explaining to him what you believe are the elements or factors inherent in the
> Presented below is the current liabilities section and related note of Mohican Company Notes to Consolidated Financial Statements Note 1 (in part): Summary of Significant Accounting Policies and Related Data Accrued Warranty The company provides an acc
> Rodriguez Corporation includes the following items in its liabilities at December 31, 2012. 1. Notes payable, $25,000,000, due June 30, 2013. 2. Deposits from customers on equipment ordered by them from Rodriguez, $6,250,000. 3. Salaries payable, $3,750,
> What must an entity disclose about its asset retirement obligations?
> Devers Corporation issued $400,000 of 6% bonds on May 1, 2013. The bonds were dated January 1, 2013, and mature January 1, 2015, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest. Prepare Devers’s journ
> Listed below are selected transactions of Schultz Department Store for the current year ending December 31. 1. On December 5, the store received $500 from the Jackson Players as a deposit to be returned after certain furniture to be used in stage product
> The following are selected 2012 transactions of Darby Corporation. Sept. 1 Purchased inventory from Orion Company on account for $50,000. Darby records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $50,000, 12-month, 8% note to Or
> What guidance does the Codification provide on the disclosure of long-term obligations?
> What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?
> Lexington Co. has the following available-for-sale securities outstanding on December 31, 2012 (its first year of operations). During 2013, Summerset Company stock was sold for $9,200, the difference between the $9,200 and the “fair v
> What features or rights may alter the character of preferred stock?
> On January 1, 2012, Novotna Company purchased $400,000, 8% bonds of Aguirre Co. for $369,114. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2017. Novotna Company u
> On January 1, 2012, Jennings Company purchased at par 10% bonds having a maturity value of $300,000. They are dated January 1, 2012, and mature January 1, 2017, with interest receivable December 31 of each year. The bonds are classified in the held-to-ma
> Use the information from BE17-1, but assume the bonds are purchased as an available-for-sale security. Prepare Garfield’s journal entries for (a) The purchase of the investment, (b) The receipt of annual interest and discount amortization, and (c) The ye
> What purpose does the variety in bond features (types and characteristics) serve?
> Access the glossary (“Master Glossary”) to answer the following. (a) What are trading securities? (b) What is the definition of “holding gain or loss”? (c) What is a cash flow hedge? (d) What is a fair value hedge?
> Assume the bonds in BE14-2 were issued at 103. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually. In BE14-2 The Colson Company issued $300,000 of 10%
> Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date. At that time, the market price of the debentures is 1
> Distinguish between a current liability and a long-term debt.
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to these financial statements and the accompanying notes to answer the following questions.
> Access the glossary (“Master Glossary”) to answer the following. (a) What is an asset retirement obligation? (b) What is the definition of “current liabilities”? (c) What does it mean if something is “reasonably possible”? (d) What is a warranty?
> Discuss the propriety of showing: (a) Treasury stock as an asset. (b) “Gain” or “loss” on sale of treasury stock as additions to or deductions from income. (c) Dividends received on treasury stock as income.
> Under what conditions should a short-term obligation be excluded from current liabilities?
> In this simulation, you are asked to address questions related to the accounting for current liabilities. Prepare responses to all parts. • KwW_Professional_Simulation Current Time Remaining O hour 20 minutes Liabilities Unspit Spk Hortz Spit Vertic
> Pleasant Co. manufactures specialty bike accessories. The company is known for product quality, and it has offered one of the best warranties in the industry on its higher-priced products—a lifetime guarantee, performing all the warranty work in its own
> YellowCard Company manufactures accessories for iPods. It had the following selected transactions during 2012. 1. YellowCard provides a 2-year warranty on its docking stations, which it began selling in 2012. During 2012, YellowCard spent $6,000 servicin
> Despite being a publicly traded company only since 1987, Northland Cranberries of Wisconsin Rapids, Wisconsin, is one of the world’s largest cranberry growers. During its short life as a publicly traded corporation, it has engaged in an
> Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system. 1. On February 2, the corporation purchased goods from Martin Company for $70,000 subject to cash discount terms of 2/10, n/30. Purchases a
> How would each of the following items be reported on the balance sheet? (a) Accrued vacation pay. (b) Estimated taxes payable. (c) Service warranties on appliance sales. (d) Bank overdraft. (e) Personal injury claim pending. Be paid from current assets.
> Assume the bonds in BE14-2 were issued at 98. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually. In BE14-2 The Colson Company issued $300,000 of 10%
> Access the glossary (Master Glossary) to answer the following. (a) What does the term “callable obligation” mean? (b) What is an imputed interest rate? (c) What is a long-term obligation? (d) What is the definition of “effective interest rate”?
> Presented below is the current liabilities section of Micro Corporation. Instructions Answer the following questions. (a) What are the essential characteristics that make an item a liability? (b) How does one distinguish between a current liability and
> For what reasons might a corporation purchase its own stock?
> Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) How much working capital do each of these companies have at the end of 2009? (b) Compute both comp
> Union Planters is a Tennessee bank holding company (that is, a corporation that owns banks). (Union Planters is now part of Regions Bank.) Union Planters manages $32 billion in assets, the largest of which is its loan portfolio of $19 billion. In additio
> The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions.
> Where can authoritative IFRS be found related to investments?
> In this simulation, you are asked to address questions related to investments. Prepare responses to all parts. KwW_Professional_Simulation Investments Time Remaining 3 hours 20 minutes Unsplt Spit Horiz Spt Verical Spreadsheet Calculator Ext Situati
> Your client, Cascade Company, is planning to invest some of its excess cash in 5-year revenue bonds issued by the county and in the stock of one of its suppliers, Teton Co. Teton’s shares trade on the over-the-counter market. Cascade plans to classify th
> Instar Company has several investments in the securities of other companies. The following information regarding these investments is available at December 31, 2012. 1. Instar holds bonds issued by Dorsel Corp. The bonds have an amortized cost of $320,00
> For the following investments, identify whether they are: 1. Trading 2. Available-for-Sale 3. Held-to-Maturity Each case is independent of the other. (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the val
> Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2012, when the unamortized discount is $30,000 and the market price of the stock is $21 per sh
> Go to the website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) Based on the information contained in these financial statements, determine each of the following for each company
> Explain how underwriting costs and accounting and legal fees associated with the issuance of stock should be recorded.
> How is compensation expense computed using the fair value approach?
> Distinguish between a debt security and an equity security.
> If a company chooses to purchase its own shares and then either (1) Retires the repurchased shares and issues additional shares, or (2) Resells the repurchased shares, can a gain or loss be recognized by the company? Why or why not?
> At what percentage point can the issuance of additional shares still qualify as a stock dividend, as opposed to a stock split?
> Access the glossary (“Master Glossary”) to answer the following. (a) What is a “convertible security”? (b) What is a “stock dividend”? (c) What is a “stock split”? (d) What are “participation rights”?
> The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Report_2010. Instructions Refer to M&S’s financial statem
> Recall from Chapter 13 that Hincapie Co. (a specialty bike-accessory manufacturer) is expecting growth in sales of some products targeted to the low-price market. Hincapie is contemplating a preference share issue to help finance this expansion in operat
