Question: Keanu Inc. has net income of $200,

> During 2017, Manion Corp. entered into the following transactions. 1. Borrowed $60,000 by issuing bonds. 2. Paid $9,000 cash dividend to stockholders. 3. Received $13,000 cash from a previously billed customer for services performed. 4. Purchased supplie

> At December 31, 2017, the trial balance of Malone Company contained the following amounts before adjustment. Instructions (a) Prepare the adjusting entry at December 31, 2017, to record bad debt expense, assuming that the aging schedule indicates that $1

> The financial statements of Apple Inc. are presented in Appendix A at the end of this textbook. Instructions Answer the following questions using the financial statements and the notes to the financial statements. (a) What were Apple’s total current asse

> Boyd Docker has just rented space in a strip mall. In this space, he will open a photography studio, to be called SnapShot! A friend has advised Boyd to set up a double-entry set of accounting records in which to record all of his business transactions.

> These accounting concepts were discussed in this and previous chapters. 1. Economic entity assumption. 2. Expense recognition principle. 3. Monetary unit assumption. 4. Periodicity assumption. 5. Historical cost principle. 6. Materiality. 7. Full disclos

> Brady Company entered into these transactions during May 2017, its first month of operations. 1. Stockholders invested $40,000 in the business in exchange for common stock of the company. 2. Purchased computers for office use for $30,000 from Ladd on acc

> Can a business enter into a transaction that affects only the left side of the basic accounting equation? If so, give an example.

> Identify and state two generally accepted accounting principles that relate to adjusting the accounts.

> Nona Curry started her own consulting firm, Curry Consulting Inc., on May 1, 2017. The following transactions occurred during the month of May. May 1 Stockholders invested $15,000 cash in the business in exchange for common stock. 2 Paid $600 for office

> Your friend Will Juritz has been hired to help take the physical inventory in Byrd’s Hardware Store. Explain to Will what this job will entail.

> The ledger of Umatilla, Inc. on March 31, 2017, includes the following selected accounts before adjusting entries. An analysis of the accounts shows the following. 1. Insurance expires at the rate of $300 per month. 2. Supplies on hand total $900. 3. Th

> The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Based on the information contained in these financial statements, determine the norm

> The ledger of Melmann Company includes the following accounts. Explain why each account may require adjustment. (a) Prepaid Insurance. (b) Depreciation Expense. (c) Unearned Service Revenue (d) Interest Payable.

> The accounting records of Ohm Electronics show the following data. Beginning inventory……………………………….3,000 units at $5 Purchases………………………………………………8,000 units at $7 Sales………………………………………..…………...9,400 units at $10 Determine cost of goods sold during the per

> Presented below are three economic events. On a sheet of paper, list the letters (a), (b), and (c) with columns for assets, liabilities, and stockholders’ equity. In each column, indicate whether the event increased (+), decreased (−), or had no effect (

> A list of concepts is provided below in the left column, with descriptions of the concepts in the right column. There are more descriptions provided than concepts. Match the description to the concept. 1. ______ Cash-basis accounting. 2. ______ Fiscal ye

> Describe the accounting information system.

> (a) How does the periodicity assumption affect an accountant’s analysis of accounting transactions? (b) Explain the term fiscal year.

> On April 1, Wonder Travel Agency Inc. was established. These transactions were completed during the month. 1. Stockholders invested $30,000 cash in the company in exchange for common stock. 2. Paid $900 cash for April office rent. 3. Purchased office equ

> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Describe in w

> Selected transactions for Thyme Advertising Company, Inc. are listed here. 1. Issued common stock to investors in exchange for cash received from investors. 2. Paid monthly rent. 3. Received cash from customers when service was performed. 4. Billed custo

> Mather sells a snowboard, EZslide, that is popular with snowboard enthusiasts. Below is information relating to Mather’s purchases of EZslide snowboards during September. During the same month, 102 EZslide snowboards were sold. Mather u

> The following independent situations require professional judgment for determining when to recognize revenue from the transactions. (a) Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home in December. (b) Ult

> Transactions made by Mickelson Co. for the month of March are shown below. Prepare a tabular analysis that shows the effects of these transactions on the expanded accounting equation, similar to that shown in Illustration 3-3 (given below). 1. The compan

> Godfreid Company has accounts receivable of $95,400 at March 31, 2017. Credit terms are 2/10, n/30. At March 31, 2017, there is a $2,100 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables

> The financial statements of Apple Inc. in Appendix A at the back of this textbook contain the following selected accounts, all in thousands of dollars. Common Stock……………………………….……………………………………………………………………..$ 23,313 Accounts Payable…………………………………..……………………

> Tim Rian, a friend of yours, has recently purchased a home for $125,000, paying $25,000 down and the remainder financed by a 6.5%, 20-year mortgage, payable at $745.57 per month. At the end of the first month, Tim receives a statement from the bank indic

> Your friend just received a car loan. It is a 7-year installment note. He does not understand the mechanics of how the loan works. Explain the important aspects of the installment note.

> Dotsin Corporation issues $400,000 of 9%, 5-year bonds on January 1, 2017, at 104. If Dotsin uses the effective interest method in amortizing the premium, will the annual interest expense increase or decrease over the life of the bonds? Explain.

> Honore Draper is discussing the advantages of the effective interest method of bond amortization with her accounting staff. What do you think Honore is saying?

> Robbins Corporation issues $200,000 of 6%, 5-year bonds on January 1, 2017, at 103. Assuming that the straight-line method is used to amortize the premium, what is the total amount of interest expense for 2017?

> Sauer Corp. has a return on assets of 12%. It plans to issue bonds at 8% and use the cash to repurchase stock. What effect will this have on its debt to assets ratio and on its return on common stockholders’ equity?

> Explain the straight-line method of amortizing discount and premium on bonds payable.

> Suppose the following information is from the 2017 annual report of American Greetings Corporation (all dollars in thousands). The notes to the company’s financial statements also include the following information. Finished products, w

> Waite Corporation issued a $50,000, 10%, 10-year installment note payable on January 1, 2017. Payments of $8,137 are made each January 1, beginning January 1, 2018. Instructions (a) What amounts should be reported under current liabilities related to the

> Purpose: To learn more about factoring from websites that provide factoring services. Address: www.ccapital.net, or go to www.wiley.com/college/kimmel Instructions Go to the website, click on Invoice Factoring, and answer the following questions. (a) Wha

> What criteria must be met before a contingency must be recorded as a liability? How should the contingency be disclosed if the criteria are not met?

> Under what circumstances will the return on assets and the return on common stockholders’ equity be equal?

> Yancey Co. receives $300,000 when it issues a $300,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2017. The terms provide for annual installment payments of $50,000 on December 31. Instructions Prepare the journ

> What are the implications for analysis if a company has significant operating leases?

> Explain the circumstances under which debt financing will increase the return on common stockholders’ equity.

> Hernandez Company issued $380,000, 7%, 10-year bonds on January 1, 2017, for $407,968. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Hernandez uses the effective-interest method to amorti

> What is the formula for the payout ratio? What does it indicate?

> Anglo Corporation has a current ratio of 1.1. Jon has always been told that a corporation’s current ratio should exceed 2.0. The company maintains that its ratio is low because it has a minimal amount of inventory on hand so as to reduce operating costs.

> Woode Corporation issued $400,000, 7%, 20-year bonds on January 1, 2017, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Woode uses the effective-interest method to amortize b

> The management of Milque Corp. is considering the effects of various inventory- costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) provide t

> A Timmins Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2017, the company’s Cash account per its general ledger showed a balance of $6,738.90. The bank statement from Emporia

> In the direct method, why is depreciation expense not reported in the cash flows from operating activities section?

> Hank Mays needs a few new trucks for his business. He is considering buying the trucks but is concerned that the additional debt he will need to incur will make his liquidity and solvency ratios look bad. What options does he have other than purchasing t

> Thom Inc.’s common stock has a par value of $1 and a current market price of $15. Explain why these amounts are different.

> Motley Company issued $300,000, 8%, 15-year bonds on December 31, 2016, for $288,000. Interest is payable annually on December 31. Motley uses the straight-line method to amortize bond premium or discount. Instructions Prepare the journal entries to reco

> (a) What is the purpose of a retained earnings restriction? (b) Identify the possible causes of retained earnings restrictions.

> The management of Ingolls Corporation is concerned because survey data suggest that many potential customers do not buy vehicles due to quality concerns. It is considering taking the bold step of increasing the length of its warranty from the industry st

> Which two ratios do you think should be of greatest interest in each of the following cases? (a) A pension fund considering the purchase of 20-year bonds. (b) A bank contemplating a short-term loan. (c) A common stockholder.

> Sehr Company issued $500,000, 6%, 30-year bonds on January 1, 2017, at 103. Interest is payable annually on January 1. Sehr uses straight-line amortization for bond premium or discount. Instructions Prepare the journal entries to record the following eve

> Ernie Sams says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ?

> At Martinez Company, checks are not pre numbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertainin

> What was the total cost of Apple’s treasury stock at September 27, 2014? What was the amount of the 2014 cash dividend? What was the size of the 2014 stock split?

> Give the formulas under the direct method for computing (a) cash receipts from customers and (b) cash payments to suppliers.

> The return on assets for Ayala Corporation is 7.6%. During the same year, Ayala’s return on common stockholders’ equity is 12.8%. What is the explanation for the difference in the two rates?

> Jenseng Inc. issues a $800,000, 10%, 10-year mortgage note on December 31, 2017, to obtain financing for a new building. The terms provide for annual installment payments of $130,196. Prepare the entry to record the mortgage loan on December 31, 2017, an

> The board of directors is considering a stock split or a stock dividend. They understand that total stockholders’ equity will remain the same under either action. However, they are not sure of the different effects of the two actions on other aspects of

> (a) In general, what are the requirements for the financial statement presentation of long-term liabilities? (b) What ratios may be computed to evaluate a company’s liquidity and solvency?

> Describe the direct method for determining net cash provided by operating activities.

> Holding all other factors constant, indicate whether each of the following changes generally signals good or bad news about a company. (a) Increase in profit margin. (b) Decrease in inventory turnover. (c) Increase in current ratio. (d) Decrease in earni

> A large retailer was sued nearly 5,000 times in a recent year—about once every 2 hours every day of the year. It has been sued for everything imaginable—ranging from falls on icy parking lots to injuries sustained in shoppers’ stampedes to a murder with

> The international accounting firm Ernst & Young performed a global survey on fraud. The results of that survey are summarized in a report titled “Driving Ethical Growth—New Markets, New Challenges” (Ernst & Young, 13th Global Fraud Survey). You can find

> Presented below is the partial bond discount amortization schedule for Rohr Corp., which uses the effective-interest method of amortization. Instructions (a) Prepare the journal entry to record the payment of interest and the discount amortization at th

> Comparative financial statement data for Loeb Corporation and Bowsh Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2017. Instructions (a) Comment on the relative profitability of the companies by computing the n

> Based on its statement of cash flows, in what stage of the product life cycle is Apple?

> What is the formula for computing the payout ratio? Do you expect this ratio to be high or low for a growth company?

> Penny Lennon, the chief financial officer of Johnson Inc., is considering the options available to her for financing the company’s new plant. Short-term interest rates right now are 6%, and long-term rates are 8%. The company’s current ratio is 2.2:1. If

> Jayne Corporation has 10,000 shares of $15 par value common stock outstanding when it announces a 3-for-1 split. Before the split, the stock had a market price of $120 per share. After the split, how many shares of stock will be outstanding, and what wil

> Underwood Boutique reported the following financial data for 2017 and 2016. Instructions (a) Calculate the current ratio for Underwood Boutique for 2017 and 2016. (b) Suppose that at the end of 2017, Underwood Boutique used $1.5 million cash to pay off

> Harvard Inc. issues $4 million, 5-year, 8% bonds at 102, with interest payable on January 1. The straight-line method is used to amortize bond premium. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Prepare the jo

> Which accounts are debited and which are credited if a bond issue originally sold at a premium is redeemed before maturity at 97 immediately following the payment of interest?

> Doris Angel asks, “Since stock dividends don’t change anything, why declare them?” What is your answer to Doris?

> Distinguish between ordinary repairs and capital expenditures during an asset’s useful life.

> At year-end, the price-earnings ratio of General Motors was 11.3, and the price-earnings ratio of Microsoft was 28.14. Which company did the stock market favor? Explain.

> (a) What are the phases of the corporate life cycle? (b) What effect does each phase have on the amounts reported in a statement of cash flows?

> The following information is available for Lessila Bowling Alley at December 31, 2017 Prepare a classified statement of financial position. Assume that $13,900 of the notes payable will be paid in 2018. Share Capital Retained Earnings (beginning) Bui

> Alpine Company issues $2 million, 10-year, 7% bonds at 99, with interest payable on December 31. The straight-line method is used to amortize bond discount. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Prepare t

> If the Bonds Payable account has a balance of $700,000 and the Discount on Bonds Payable account has a balance of $36,000, what is the carrying value of the bonds?

> During 2017, Slivowitz Company exchanged $1,700,000 of its common stock for land. Indicate how the transaction would be reported on a statement of cash flows, if at all.

> Contrast the effects of a cash dividend and a stock dividend on a corporation’s balance sheet.

> Which ratios should be used to help answer each of these questions? (a) How efficient is a company in using its assets to produce sales? (b) How near to sale is the inventory on hand? (c) How many dollars of net income were earned for each dollar investe

> Suppose McDonald’s 2017 financial statements contain the following selected data (in millions). Instructions (a) Compute the following values and provide a brief interpretation of each. (1) Working capital. (2) Current ratio. (3) Debt

> On January 1, 2017, Lenne Corporation had $1,200,000 of common stock outstanding that was issued at par and retained earnings of $750,000. The company issued 30,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year. I

> Alysha Monet has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Depreciation provides for the proper matching of expenses with revenues. 3. The book value of a plant

> Suppose the Canadian National Railway Company’s (CN) total assets in a recent year were $24,004 million and its total liabilities were $14,180 million. That year, CN reported operating lease commitments for its locomotives, freight cars, and equipment to

> Handi Mart, a retail store, has an accounts receivable turnover of 4.5 times. The industry average is 12.5 times. Does Handi Mart have a collection problem with its receivables?

> Three dates associated with Petrie Company’s cash dividend are May 1, May 15, and May 31. Discuss the significance of each date and give the entry at each date.

> Suppose the following information (in thousands of dollars) is available for H. J. Heinz Company—famous for ketchup and other fine food products—for the year ended April 30, 2017. Instructions Prepare the assets sect

> Why is the statement of cash flows useful?

> Sanchez, Inc. reports the following liabilities (in thousands) on its December 31, 2017, balance sheet and notes to the financial statements. Instructions (a) Identify which of the above liabilities are likely current and which are likely long-term. Lis

> Cabo Company has $1,000,000 in assets and $1,000,000 in stockholders’ equity, with 40,000 shares outstanding the entire year. It has a return on assets of 10%. During 2016, it had net income of $100,000. On January 1, 2017, it issued $400,000 in debt at

> The following information is taken from the 2017 general ledger of Preminger company. Instructions In each case, compute the amount that should be reported in the operating activities section of the statement of cash flows under the direct method. R

> Selected data taken from a recent year’s financial statements of trading card company Topps Company, Inc. are as follows (in millions). Net sales $326.7 Current liabilities, beginning of year 41.1 Current liabilities, end of year

> Suppose the 2017 adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. (a) Working capital. (b) Current ratio (c) Debt to assets ratio. (d) Times interest

> Match the statement with the term most directly associated with it. Goodwill Amortization Intangible assets Franchise Research and development costs 1. _______ Rights, privileges, and competitive advantages that result from the ownership of long-l