Fresh Produce Foods, Inc., is authorized to issue 3,750,000 shares of $5.00 par common stock. In its initial public offering during 2012, Fresh Produce issued 360,000 shares of its $5.00 par common stock for $5.50 per share. Over the next year, Fresh Produce’s stock price increased, and the company issued 400,000 more shares at an average price of $9.50. During 2014, the price of Fresh Produce’s common stock dropped to $7.50, and Fresh Produce purchased 59,000 shares of its common stock for the treasury. After the market price of the common stock rose in 2015, Fresh Produce sold 45,000 shares of the treasury stock for $10.00 per share. During the five years 2012 to 2017, Fresh Produce earned net income of $940,000 and declared and paid cash dividends of $245,000. Stock dividends of $441,630 were distributed to the stockholders in 2013, with $315,450 credited to common stock and $126,180 credited to additional paid-in capital. At December 31, 2017, total assets of the company are $14,500,000, and liabilities add up to $8,017,500. Requirement Show the computation of Fresh Produce’s total stockholders’ equity at December 31, 2017. Present a detailed computation of each element of stockholders’ equity.
> Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by one and on
> Beth’s Society Clothiers, Inc., has collection centers across the country to speed up collections. The company also makes payments from remote disbursement centers so the firm’s checks will take longer to clear the bank. Collection time has been reduced
> Logan Distributing Company of Atlanta sells fans and heaters to retail outlets through out the Southeast. Joe Logan, the president of the company, is thinking about changing the firm's credit policy to attract customers away from competitors. The present
> What does the term structure of interest rates indicate?
> Discuss the relative volatility of short- and long-term interest rates.
> What are three theories for describing the shape of the term structure of interest rates (the yield curve)? Briefly describe each theory. Liquidity premium theory, the market segmentation theory, and the expectations theory.
> A firm that uses short-term financing methods for a portion of permanent current assets is assuming more risk but expects higher returns than a firm with a normal financing plan. Explain.
> By using long-term financing to finance part of temporary current assts, a firm may have less risk but lower returns than a firm with a normal financing plan. Explain the significance of this statement.
> “The most appropriate financing pattern would be one in which asset buildup and length of financing terms is perfectly matched.” Discuss the difficulty involved in achieving this financing pattern.
> How is a cash budget used to help manage current assets?
> Delsing Plumbing Company has beginning inventory of 14,000 units, will sell 50,000 units for the month, and desires to reduce ending inventory to 40 percent of beginning inventory. How many units should Delsing produce?
> Mansfield Corporation had 2010 sales of $100 million. The balance sheet items that vary directly with sales and the profit margin are as follows: The dividend payout rate is 50 percent of earnings, and the balance in retained earnings at the end of 2010
> Use the Amazing Way data in Short Exercise S11-3. In addition, Amazing Way had unrealized gains of $1,100 on investments and a $2,400 foreign-currency translation adjustment (a gain) during 2012. Both amounts are net of tax. Start with Amazing Wayâ
> Return to the Amazing Way data in Short Exercise 11-3. Amazing Way had 10,000 shares of common stock outstanding during 2012. Amazing Way declared and paid preferred dividends of $6,000 during 2012. Report Amazing Way’s earnings per sha
> Apex Marine, Inc., had income before income tax of $117,000 and taxable income of $91,000 for 2012, the company’s first year of operations. The income tax rate is 30%. 1. Make the entry to record Apex Marine’s income taxes for 2012. 2. Show what Apex Mar
> Jamison Cruise Lines, Inc., reported the following income statement for the year ended December 31, 2012: _____________________________________Millions Operating revenues ............................................................... $95,500 Operating e
> Boat Belting sells goods for 900,000 Mexican pesos. The foreign-exchange rate for a peso is $0.094 on the date of sale. Boat Belting then collects cash on April 24 when the exchange rate for a peso is $0.099. Record Boat’s cash collection. Boat Belting b
> Suppose Cola Corp. sells soft drink syrup to a Russian company on September 12. Cola Corp. agrees to accept 200,000 Russian rubles. On the date of sale, the ruble is quoted at $0.34. Cola Corp. collects half the receivable on October 18 when the ruble is
> For fiscal year 2012, Mango Computer, Inc., reported net sales of $19,323 million, net income of $1,997 million, and no significant discontinued operations, extraordinary items, or accounting changes. Earnings per share was $2.20. At a capitalization rat
> Amazing Way, Inc., reported the following items, listed in no particular order at December 31, 2012 (in thousands): Income tax of 35% applies to all items. Prepare Amazing Way’s income statement for the year ended December 31, 2012. O
> Study the 2012 income statement of Original Imports, Inc., and answer these questions about the company: 1. How much gross profi t did Original earn on the sale of its products in 2012? How much was income from continuing operations? Net income? 2. At
> Research has shown that over 50% of financial statement frauds are committed by companies that improperly recognize revenue. What does this mean? Describe the most common ways companies improperly recognize revenue.
> Answer the following questions about the characteristics of a corporation’s stock: 1. Who are the real owners of a corporation? 2. What privileges do preferred stockholders have over common stockholders? 3. Which class of stockholders reaps greater benef
> On an indirect method statement of cash flows, an increase in accounts payable would be a. Added to net income in the operating activities section. b. Reported in the financing activities section. c. Deducted from net income in the operating activities s
> Amazon.com’s consolidated financial statements appear in Appendix A at the end of this book. 1. Refer to the Consolidated Balance Sheets and Note 7 (Stockholders’ Equity). Describe the classes of stock that Amazon.com, Inc., has authorized. How many shar
> This case is based on a real situation. George Campbell paid $50,000 for a franchise that entitled him to market Success Associates software programs in the countries of the European Union. Campbell intended to sell individual franchises for the major la
> Nate Smith and Darla Jones have written a computer program for a video game that may rival PlayStation and Xbox. They need additional capital to market the product, and they plan to incorporate their business. Smith and Jones are considering alternative
> Which of the following is a characteristic of a corporation? a. No income tax b. Mutual agency c. Limited liability of stockholders d. Both a and b
> Smiley Site, Inc., ended 2012 with 10 million shares of $1 par common stock issued and outstanding. Beginning additional paid-in capital was $9 million, and retained earnings totaled $44 million. â–¶ In April 2013, Smiley Site issued 9 mi
> Orbit Corporation reported the following stockholders’ equity data (all dollars in millions except par value per share): Orbit earned net income of $2,920 during 2012. For each account except Retained Earnings, one transaction explain
> Use the I-9 Networking Solutions data in Exercise 10-88 to show how the company reported cash flows from financing activities during 2012. In Exercise 10-88 I-9 Networking Solutions began operations on January 1, 2012, and immediately issued its stock,
> I-9 Networking Solutions began operations on January 1, 2012, and immediately issued its stock, receiving cash. I-9’s balance sheet at December 31, 2012, reported the following stockholders’ equity: Common stock, $1 pa
> The statement of cash flows of Cooper, Inc., reported the following for the year ended December 31, 2012: Cash flows from financing activities (amounts in millions) Cash dividends paid ............................................................... $(1,7
> Consider the authority structure in a corporation, as diagrammed in Exhibit 10-2. 1. What group holds the ultimate power in a corporation? 2. Who is the most powerful person in the corporation? What’s the abbreviation of this person&aci
> The following accounts and related balances of Dove Designers, Inc., as of December 31, 2012, are arranged in no particular order. Requirements 1. Prepare Dove’s classified balance sheet in the account format at December 31, 2012. 2.
> On an indirect method statement of cash flows, an increase in a prepaid insurance would be a. Deducted from net income. b. Added to increases in current assets. c. Added to net income. d. Included in payments to suppliers.
> Assume ABC Cupcakes of Montana, Inc., completed the following transactions during 2012, the company’s 10th year of operations: Feb 3 Issued 10,000 shares of common stock ($3.00 par) for cash of $280,000. Mar 19 Purchased 2,700 shares of the company’s own
> Madrid Jewelry Company reported the following summarized balance sheet at December 31, 2012: Assets Current assets............................................................................................. $ 34,500 Property and equipment, net….........
> Bentley Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2013: Stockholders’ Equity Preferred stock, 6.0% cumulative—par value $25 per share authorized 140,000 shares in each class Class
> Healthy Living Foods, Inc., is authorized to issue 4,250,000 shares of $1.00 par common stock. In its initial public offering during 2012, Healthy Living issued 390,000 shares of its $1.00 par common stock for $5.50 per share. Over the next year, Healthy
> Callman Corp. has the following stockholders’ equity information: Callman’s charter authorizes the company to issue 10,000 shares of 6% preferred stock with par value of $90 and 750,000 shares of no-par common stock. The company issued 2,000 shares of th
> The partners who own Ameen Canoes Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Ameen Canoes, Inc. The charter from the state of Mississippi authorizes the corporation to issue 150,000 s
> The statement of cash flows of Spirit, Inc., reported the following for the year ended December 31, 2012: Cash flows from financing activities (amounts in millions) Cash dividends paid ............................................................... $(1,8
> The following accounts and related balances of Bluebird Designers, Inc., as of December 31, 2012, are arranged in no particular order. Requirements 1. Prepare Bluebird’s classified balance sheet in the account format at December 31, 2
> What are two main advantages that a corporation has over a proprietorship and a partnership? What are two main disadvantages of a corporation?
> Assume Frozen Foods of Maine, Inc., completed the following transactions during 2012, the company’s 10th year of operations: Feb 3 Issued 11,000 shares of common stock ($3.00 par) for cash of $275,000. Mar 19 Purchased 2,400 shares of the company’s own c
> Paris Jewelry Company reported the following summarized balance sheet at December 31, 2012: Assets Current assets................................................................................. $ 33,700 Property and equipment, net.......................
> Which of the following terms appears on a statement of cash flows—indirect method? a. Collections from customers b. Depreciation expense c. Payments to suppliers d. Cash receipt of interest revenue
> Reliable Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2013: Stockholders’ Equity Preferred stock, 7.5% cumulative—par value $15 per share; authorized 110,000 shares in each class Clas
> Doorman Corp. has the following stockholders’ equity information: Doorman’s charter authorizes the company to issue 7,000 shares of 10% preferred stock with par value of $140 and 750,000 shares of no-par common stock. The company issued 1,400 shares of t
> The partners who own Jefferson Canoes Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Jefferson Canoes, Inc. The charter from the state of Nevada authorizes the corporation to issue 110,00
> Use the Easton data in Exercise E10-50B to show how the company reported cash flows from financing activities during 2012 (the current year). List items in descending order from largest to smallest dollar amount. Data from Exercise E10-50B Easton Compan
> Easton Company included the following items in its financial statements for 2012, the current year (amounts in millions): Requirements 1. Use DuPont analysis to compute Easton’s return on assets and return on common equity during 2012
> Lexington Inns reported these figures for 2013 and 2012 (in millions): Requirements 1. Use DuPont analysis to compute Lexington’s return on assets and return on common stockholders’ equity for 2013. 2. Do these rates
> Microsoft Corporation is the defendant in numerous lawsuits claiming unfair trade practices. Microsoft has strong incentives not to disclose these contingent liabilities. However, GAAP requires that companies report their contingent liabilities. Require
> The balance sheet of Beecham Rug Company reported the following: Redeemable preferred stock, 6%, $90 par value, redemption value $25,000; outstanding 200 shares..............................................................................................
> Solartech Corp. had the following stockholders’ equity at May 31 (dollars in millions, except par value per share): Stockholders’ Equity Common stock, $1.20 par, 900 million shares authorized, 400 million shares issued ….. $ 480 Additional paid-in capita
> Identify the effects—both the direction and the dollar amount—of these assumed transactions on the total stockholders’ equity of Triton Corporation. Each transaction is independent. a. Declaration of cash dividends of $75 million. b. Payment of the cash
> Selling equipment is reported on the statement of cash flows under a. Financing activities. b. Non-cash investing and financing activities. c. Operating activities. d. Investing activities.
> The stockholders’ equity for Perfect Desserts Drive-Ins (PD) on December 31, 2012, follows: Stockholders’ Equity Common stock, $0.75 par, 2,700,000 shares authorized, 500,000 shares issued …….. $ 375,000 Paid-in capital in excess of par—common …………………………
> Majestic Manufacturing, Inc., reported the following: Stockholders’ Equity Preferred stock, cumulative, $2.00 par, 8%, 70,000 shares issued ………….. $ 140,000 Common stock, $0.15 par, 9,070,000 shares issued ……………..…….………….. 1,360,500 Majestic Manufacturi
> Zeta Products Company reported the following stockholders’ equity on its balance sheet: Requirements 1. What caused Zeta’s preferred stock to decrease during 2013? Cite all possible causes. 2. What caused Zetaâ
> Use the Northern Corporation data in Exercise 10-41B to prepare the stockholders’ equity section of the company’s balance sheet at December 31, 2013. In Exercise 10-41B At December 31, 2012, Northern Corporation reported the stockholders’ equity account
> At December 31, 2012, Northern Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts). Common stock $4.00 par value per share, 2,300 million shares issued................ $ 9,200 Paid
> Journalize the following assumed transactions of Ambient Productions: Feb 22 Issued 1,800 shares of $1.75 par common stock at $5 per share. Jun 25 Purchased 400 shares of treasury stock at $14 per share. Jul 9 Sold 300 shares of treasury stock at $22 per
> In 2002, Enron Corporation fi led for Chapter 11 bankruptcy protection, shocking the business community: How could a company this large and this successful go bankrupt? This case explores the causes and the effects of Enron’s bankruptcy
> Sagebrush Software had the following selected account balances at December 31, 2012 (in thousands, except par value per share): Requirements 1. Prepare the stockholders’ equity section of Sagebrush Software’s balance
> Time Travel Publishing was recently organized. The company issued common stock to an attorney who provided legal services worth $25,000 to help organize the corporation. Time Travel also issued common stock to an inventor in exchange for his patent with
> Captain Sporting Goods is authorized to issue 13,000 shares of common stock. During a two-month period, Captain completed these stock-issuance transactions: Jul 23 Issued 3,200 shares of $1.00 par common stock for cash of $13.00 per share. 12 Received in
> Pryor Sales, Inc., is authorized to issue 190,000 shares of common stock and 10,000 shares of preferred stock. During its first year, the business completed the following stock issuance transactions: Jul 19 Issued 12,000 shares of $4.00 par common stock
> The sale of inventory for cash is reported on the statement of cash flows under a. Investing activities. b. Non-cash investing and financing activities. c. Operating activities. d. Financing activities.
> Use the California Company data in Exercise E10-34A to show how the company reported cash flows from financing activities during 2012 (the current year). List items in descending order from largest to smallest dollar amount. In Exercise E10-34A Californ
> California Company included the following items in its financial statements for 2012, the current year (amounts in millions): Requirements 1. Use DuPont analysis to compute California’s return on assets and return on common equity dur
> Lofty Inns reported these figures for 2013 and 2012 (in millions): Requirements 1. Use DuPont analysis to compute Lofty’s return on assets and return on common stockholders’ equity for 2013. 2. Do these rates of retu
> The balance sheet of Basket Rug Company reported the following: Redeemable preferred stock, 5%, $70 par value, redemption value $35,000; outstanding 400 shares...............................................................................................
> Ace Corp. had the following stockholders’ equity at January 31 (dollars in millions, except par value per share): Stockholders’ Equity Common stock, $1.80 par, 500 million shares authorized, 425 million shares issued ….. $ 765 Additional paid-in capital…
> Determine whether the following bonds payable will be issued at par value, at a premium, or at a discount: a. The market interest rate is 7%. Horton Corp. issues bonds payable with a stated rate of 6 1/2%. b. Sharp, Inc., issued 6% bonds payable when the
> Identify the effects—both the direction and the dollar amount—of these assumed transactions on the total stockholders’ equity of Townsend Corporation. Each transaction is independent. a. Declaration of cash dividends of $76 million. b. Payment of the cas
> The stockholders’ equity for Dairy Place Drive-Ins (DP) on December 31, 2012, follows: Stockholders’ Equity Common stock, $0.30 par, 2,600,000 shares authorized, 600,000 shares issued ……. $ 180,000 Paid-in capital in excess of par—common ……………………………………….
> Superb Manufacturing, Inc., reported the following: Stockholders’ Equity Preferred stock, cumulative, $1.00 par, 6%, 90,000 shares issued …………. $ 90,000 Common stock, $0.30 par, 9,130,000 shares issued ………………..…………… 2,739,000 Superb Manufacturing has pa
> Omicron Products Company reported the following stockholders’ equity on its balance sheet: Requirements 1. What caused Omicron’s preferred stock to decrease during 2013? Cite all possible causes. 2. What caused Omicr
> Use the Blumenthal Corporation data in Exercise 10-25A to prepare the stockholders’ equity section of the company’s balance sheet at December 31, 2013. In Exercise 10-25A At December 31, 2012, Blumenthal Corporation reported the stockholders’ equity acc
> Paying off bonds payable is reported on the statement of cash flows under a. Financing activities. b. Non-cash investing and financing activities. c. Operating activities. d. Investing activities.
> At December 31, 2012, Blumenthal Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts). Common stock $3.00 par value per share, 2,400 million shares issued................ $ 7,200 Ca
> Journalize the following transactions of Alameda Productions: Jan 21 Issued 1,800 shares of $1.25 par common stock at $13 per share. Jun 23 Purchased 500 shares of treasury stock at $15 per share. Jul 12 Sold 400 shares of treasury stock at $22 per share
> Casey Software had the following selected account balances at December 31, 2012 (in thousands, except par value per share). Requirements 1. Prepare the stockholders’ equity section of Casey’s balance sheet (in thousa
> Excursion Publishing was recently organized. The company issued common stock to an attorney who provided legal services worth $20,000 to help organize the corporation. Excursion also issued common stock to an inventor in exchange for his patent with a ma
> The Coca-Cola Company reported the following comparative information at December 31, 2010, and December 31, 2009 (amounts in millions and adapted): Requirements 1. Calculate the following ratios for 2010 and 2009: a. Current ratio b. Debt ratio 2. Duri
> St. Genevieve Petroleum Company is an independent oil producer in Baton Parish, Louisiana. In February, company geologists discovered a pool of oil that tripled the company’s proven reserves. Prior to disclosing the new oil to the public, St. Genevieve q
> This case is based on the consolidated financial statements of RadioShack Corporation given in Appendix B at the end of this book. In particular, this case uses RadioShack Corporation’s consolidated statement of shareholders’ equity for the year 2010. 1.
> The global economic recession that started in 2007, and that persists in certain sectors, has impacted every business, but it was especially hard on banks, automobile manufacturing, and retail companies. Banks were largely responsible for the recession.
> Colonel Sporting Goods is authorized to issue 18,000 shares of common stock. During a two-month period, Colonel completed these stock-issuance transactions: Apr 23 Issued 3,000 shares of $1.00 par common stock for cash of $14.50 per share. 12 Received in
> Aerostar, Inc., operates as a retailer of casual apparel. A recent, condensed income statement for Aerostar follows: Requirements 1. Assume that the following transactions were inadvertently omitted at the end of the year. Using the categories in the t
> Brown-Box Retail Corporation reported shareholders’ equity on its balance sheet at December 31, 2013 as follows: Requirements 1. Identify the two components that typically make up accumulated other comprehensive income. 2. For each co
> Fall River Specialties, Inc., reported the following statement of stockholders’ equity for the year ended October 31, 2012: Requirements Answer these questions about Fall River Specialties’ stockholdersâ€&
> The accounting (not the income tax) records of Johnson Publications, Inc., provide the income statement for 2012. ___________________________2012 Total revenue........................................... $850,000 Expenses: Cost of goods sold..............
> Jackson Hallstead, accountant for Confection Pies, was injured in an auto accident. While he was recuperating, another inexperienced employee prepared the following income statement for the fiscal year ended June 30, 2012: The individual amounts listed
> Better Experts Ltd. (BEL) specializes in taking underperforming companies to a higher level of performance. BEL’s capital structure at December 31, 2011, included 10,000 shares of $2.25 preferred stock and 120,000 shares of common stock. During 2012, BEL
> Suppose Blanco Corporation completed the following international transactions: May 1 Sold inventory on account to Aromando, the Italian automaker, for €70,000. The exchange rate of the euro was $1.33, and Aromando demands to pay in euros. 10 Purchased su
> What is the largest single item included in Buffalo Bell’s debt ratio at December 31, 2012? a. Cash and cash equivalents b. Common Stock c. Accounts payable d. Investments Buffalo Bell Corporation Consolidatcd Statements of Financ
