Question: Leno Corporation reported the following amounts for

> At the beginning of the year, Morgan Company had total assets of $425,000 and total liabilities of $260,000. Required: Use the fundamental accounting equation to answer the following independent questions: 1. What is total stockholders’ equity at the be

> Can accounting transactions be directly recorded in the general ledger? If so, why do most companies initially record transactions in the journal?

> The words debit and credit are used in two ways in accounting: ‘‘to debit an account’’ and ‘‘a debit balance.’’ Explain both usages of the terms debit and credit.

> Do you agree with the statement that ‘‘debits mean increase and credits mean decrease’’? If not, what do debit and credit mean?

> What is a T-account? Describe the basic components of any account.

> How do revenues and expenses affect the accounting equation?

> In analyzing a transaction, can a transaction only affect one side of the accounting equation? If so, give an example.

> What is the basic process used in transaction analysis?

> In order for a transaction to be recorded in a business’ accounting records, the effects of the transaction must be faithfully represented. What is faithful representation, and why is it important?

> Of all the events that occur each day, how would you describe those that are recorded in a firm’s accounting records?

> How are the financial statements related to generally accept accounting principles?

> Listed below are three independent scenarios. Required: Use the fundamental accounting equation to find the missing amounts. Scenario Assets Liabilities Equity $ (a) 115,000 54,000 $42,000 (b) 18,500 $56,000 77,000 (c) 2 3

> Discuss the four principles that are used to measure and record business transactions.

> Identify the four assumptions that underlie accounting.

> Distinguish between comparability and consistency.

> Discuss the trade-offs that may be necessary between the qualitative characteristics.

> Identify the characteristics of useful information.

> What is the conceptual framework of accounting?

> What are the initial steps in the accounting cycle and what happens in each step?

> Four statements are given below. a. Quagmire Company recognizes revenue when the goods are delivered to a customer, even though cash will not be collected from the customer for 30 days. b. Inventory, which was recently damaged by a flood, is reported at

> Four statements are given below. a. Pewterschmidt Company values its inventory reported in the financial statements in terms of dollars instead of units. b. Property, plant, and equipment is recorded at cost (minus any accumulated depreciation) instead o

> Three statements are given below. a. A financial item that may be useful to investors is not required to be reported because the cost of measuring and reporting this information is judged to be too great. b. Timely information that is used to predict fut

> Define current assets and current liabilities. Why are current assets and current liabilities separated from noncurrent assets and long-term liabilities on the balance sheet?

> Three statements are given below. a. When financial information is free from error or bias, the information is said to possess this characteristic. b. Griffin Company uses the same depreciation method from period to period. c. A trash can that is purchas

> Four transactions that occurred during May are listed below. a. May 5: Borrowed cash of $40,000 from Middle State Bank. b. May 10: Made cash sales of $28,500 to customers. c. May 19: Paid salaries of $15,600 to employees for services performed. d. May 22

> Four transactions that occurred during June are listed below. a. June 1: Issued common stock to several investors for $100,000. b. June 8: Purchased equipment for $16,800 cash. c. June 15: Made cash sales of $23,200 to customers. d. June 29: Paid a $4,50

> Refer to the accounts listed below. a. Accounts Payable b. Accounts Receivable c. Retained Earnings d. Sales e. Equipment f. Common Stock g. Salary Expense h. Repair Expense Required: For each of the accounts, complete the following table by entering the

> The Mendholm Company entered into the following transactions: a. Performed services on account, $21,500. b. Collected $9,500 from client related to services performed in Item a. c. Paid $500 dividend to stockholders. d. Paid salaries of $4,000 for the cu

> Morgan Inc. entered into the following transactions: a. Issued common stock to investors in exchange for $30,000 cash. b. Borrowed $10,000 cash from First State Bank. c. Purchased $3,000 of supplies on credit. d. Paid for the purchase in Transaction c.

> Four transactions are listed below. a. Sold goods to customers on credit. b. Collected amounts due from customers. c. Purchased supplies on account. d. Used supplies in operations of the business. Required: Prepare three columns labeled assets, liabilit

> Listed below are the ledger accounts for Borges Inc. at December 31, 2019. All accounts have normal balances. Service Revenue $23,150 Dividends $ 1,500 Cash 12,850 Salaries Expense 4,300 Accounts Payable 2,825 Equipment 12,725 Common

> Susan Eel wants to sell you her wholesale fish store. She shows you a balance sheet with total assets of $150,000 and total liabilities of $20,000. According to the income statement, last year’s net income was $40,000. When examining the accounting recor

> After much consideration, Cam and Anna decide to organize their company as a corporation. On January 1, 2019, Front Row Entertainment Inc. begins operations. Due to Cam’s family connections in the entertainment industry, Cam assumes the major responsibil

> What information is included in the heading of each of the four financial statements?

> Ehrlich Smith, the owner of The Shoe Box, has asked you to help him understand the proper way to account for certain accounting items as he prepares his 2019 financial statements. Smith has provided the following information and observations: a. A 3-year

> Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: 1. Determine the amounts in the accounting equation for the year ending December 31, 2016,

> Obtain General Electric’s 2016 annual report either through the ‘‘Investor Relations’’ portion of its website (do a web search for GE investor relations) or go to www.sec.gov and click ‘‘Company Filings Search’’ under ‘‘Filings.’’ Required: 1. Determine

> Kathryn Goldsmith is the chief accountant for Clean Sweep, a national carpet-cleaning service with a December fiscal year-end. As Kathryn was preparing the 2019 financial statements for Clean Sweep, she noticed several odd transactions in the general led

> You have the following data for Cable Company’s accounts receivable and accounts payable for 2019: Accounts receivable, 1/1/2019............................ $ 6,325 2019 Sales on credit............................................. 93,680 Accounts receiv

> Five common accounting practices are listed below: a. A customer pays $20 to mail a package on December 30. The delivery company recognizes revenue when the package is delivered in January. b. Jim Trotter owns C&S Heating Company. In preparing the financ

> Six statements are given below: a. The two fundamental qualitative characteristics that information should possess are __________ and __________. b. __________ is the characteristic that allows external users to identify similarities and differences betw

> Listed below are selected T-accounts and their beginning balances for Galle Inc.  Cash    Accounts Receivable      12,000     6,300                                            .        

> Galle Inc. entered into the following transactions during January. a. January 1: Borrowed $50,000 from First Street Bank by signing a note payable. b. January 4: Purchased $25,000 of equipment for cash. c. January 6: Paid $500 to landlord for rent for Ja

> Refer to the accounts listed below. a. Accounts Receivable b. Accounts Payable c. Cash d. Equipment e. Notes Payable f. Rent Expense g. Salaries Expense h. Service Revenue Required: For each of the accounts, indicate the normal balance of the account an

> Write the fundamental accounting equation. Why is it significant?

> Galle Inc. entered into the following transactions during January. a. Borrowed $50,000 from First Street Bank by signing a note payable. b. Purchased $25,000 of equipment for cash. c. Paid $500 to landlord for rent for January. d. Performed services for

> Several events are listed below. a. Paid $30,000 for land. b. Purchased office supplies for cash. c. Performed consulting services for a client with the amount to be collected in 30 days. d. Signed a contract to perform consulting services over the next

> The following trial balance that was prepared by the bookkeeper of Mason Company does not balance. Required: Prepare a correct trial balance. Assume all accounts have normal balances. Mason Company Trial Balance December 31, 2019 Debit Credit Cash $2

> At the beginning of 2019, KJ Corporation had total assets of $525,700, total liabilities of $290,800, common stock of $100,000, and retained earnings of $134,900. During 2019, KJ had net income of $205,500, paid dividends of $70,000, and issued additiona

> Data from the financial statements of four different companies are presented in separate columns in the table below. Each column has one or more data items missing. Required: Use your understanding of the relationships among the financial statement items

> McDonald Marina provides docking and cleaning services for pleasure boats at its marina in southern Florida. The following account balances are available: Accounts payable $ 26,400 Interest expense $ 236,000 Accounts receivable 268,700 I

> The table below presents the retained earnings statements for Dillsboro Corporation for 3 successive years. Certain numbers are missing. Required: Use your understanding of the relationship between successive retained earnings statements to calculate the

> Magical Experiences Vacation Company has the following data available: Dividends, 2019 $ 14,000 Retained earnings, 12/31/2018 $ 55,300 Dividends, 2020 16,000 Revenues, 2019 221,900 Expenses, 2019 188,500 Revenues, 2020 325,400 Expenses, 20

> Ross Airport Auto Service provides parking and minor repair service at the local airport while customers are away on business or pleasure trips. The following account balances (except for retained earnings) are available for Ross Airport Auto Service at

> What is point-in-time measurement? How does it differ from period-of-time measurement?

> Define accounting. How does accounting differ from bookkeeping?

> Procter & Gamble is a $77 billion company that sells products that are part of most of our daily lives, including Mr. Clean, Cheer, Crest, Vicks, Scope, Pringles, Folgers, Vidal Sassoon, Zest, and Charmin. The annual report for P&G contained the followin

> The stockholders’ equity section on the December 31, 2011, balance sheet of American Corporation follows: Required: Complete the following statements and show your computations. 1. The number of shares of preferred stock issued was

> Complete the following requirements for each independent case. Case A: The charter for Rogers, Incorporated, authorized the following capital stock: Common stock, par $10, 103,000 shares Preferred stock, 9 percent, par value $8 per share, 4,000 shares Th

> A recent annual report for Halliburton Company contained the following information (in millions of dollars): In the current year, Halliburton declared and paid cash dividends of $1 per share. What would be the total amount of dividends declared and pai

> You are a member of the board of directors of a large company that has been in business for more than 100 years. The company is proud of the fact that it has paid dividends every year it has been in business. Because of this stability, many retired peopl

> Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C). Required: 1. A few years ago, American Eagle Outfitters split its stock. Describe the impact that the splitwould have on the market value of the stock co

> Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book. Required: 1. How many shares of common stock are authorized at the end of the current year? How many shares are issued and outstanding at the end of the c

> Refer to the financial statements of American Eagle Outfitters given in Appendix B at the end of this book. Required: 1. Does the company have any treasury stock? If so, how much? 2. Does the company pay dividends? If so, how much per share? 3. Did the

> Granderson Company was granted a charter that authorized the following capital stock: Common stock: 100,000 shares, par value per share is $40 Preferred stock: 8 percent; par $5; 20,000 shares During the first year, 2011, the following selected transac

> At December 31, 2011, the records of Duo Corporation provided the following selected and incomplete data: Common stock (par $1; no changes during the year). Shares authorized, 5,000,000. Shares issued, ? ; issue price $80 per share. Shares

> Refer to the financial statements of American Eagle (Appendix B) and Urban Outfitters (Appendix C) and the Industry Ratio Report (Appendix D) at the end of this book. Most companies report some amounts of bonds payable on their balance sheets. It is some

> Carlton Company had the following stock outstanding and retained earnings at December 31, 2011: Common stock (par $1; outstanding, 500,000 shares) ...............$500,000 Preferred stock, 8% (par $10; outstanding, 21,000 shares) ...........210,000 Retai

> Whole Foods Market, Inc., is the world’s leading natural and organic foods supermarket. The company is based in Austin, Texas, and conducts business through various wholly-owned subsidiaries. The followinginformation was contained in th

> Luther Company obtained a charter from the state in January 2011 which authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $429,000, and the following selected transactions occurred in the order given: a.

> Differentiate between callable and convertible bonds.

> What is the difference between the stated interest rate and the effective-interest rate on a bond?

> At the date of issuance, bonds are recorded at their current cash equivalent amount. Explain.

> From the perspective of the issuer, what are some advantages of issuing bonds instead of capital stock?

> Differentiate secured bonds from unsecured bonds.

> What is the difference between a bond indenture and a bond certificate?

> What are the primary characteristics of a bond? For what purposes are bonds usually issued?

> Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book. Required: 1. Unlike most companies, Urban Outfitters does not report the amount of interest paid in cash during the most recent reporting year. Explain wh

> Explain the basic difference between the straight-line and the effective-interest methods of amortizing a bond discount or premium. Explain when each method should or may be used.

> What is the book value of a bond payable?

> Differentiate among the stated and effective rates of interest on a bond (a) sold at par, (b) sold at a discount, and (c) sold at a premium.

> Explain the nature of the discount and premium on bonds payable.

> As the tax rate increases, the net cost of borrowing money decreases. Explain.

> Determine whether each of the following would be reported in the financing activities section of the statement of cash flows and, if so, specify whether it is a cash inflow or outflow. 1. Sale of bonds at a discount. 2. Payment of interest on a bond. 3.

> McDermott International is an engineering and construction company with significant oil and gas operations. The annual report for McDermott contains the following note: The company used cash on hand to purchase the entire $200 million in aggregate princi

> On January 1, 2011, Antonio Company issued $700,000 in bonds that mature in 10 years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 10 per

> On January 1, 2011, Cunningham Corporation issued $200,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 6 percent and pay interest on December 31. When the bonds were sold, the market rate of interest was 8 percent. The comp

> Akron Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2011 Maturity amount and date: $100,000 due in 10 years Interest: 10 percent per annum payable each June 30 and December 31 Date

> AMC Entertainment, Inc., owns and operates 243 movie theaters with 1,617 screens in 22 states. The company sold 11 7/8 percent bonds in the amount of $52,720,000 and used the cash proceeds to retire bonds with a coupon rate of 13.6 percent. At that time,

> Barnett Corporation sold a $500,000, 7 percent bond issue on January 1, 2011. The bonds pay interest each June 30 and December 31 and mature 10 years from January 1, 2011. For comparative study and analysis, assume three separate cases. Use straight-line

> On January 1, 2011, Nowell Company issued $300,000 in bonds that mature in five years. The bondshave a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 8 per

> Arbor Corporation’s financial statements for 2011 showed the following: Income Statement Revenues .................................................................$300,000 Expenses ......................................................

> DirectTV is the largest provider of direct-to-home digital television services and the second largest provider in the multichannel video programming distribution industry in the United States. It provides over 16 million subscribers with access to hundre

> MBTA Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2011. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The following schedu

> Commonwealth Company issued bonds with the following provisions: Maturity value: $300,000 Interest: 11 percent per annum payable annually each December 31 Terms: Bonds dated January 1, 2011, due five years from that date The annual accounting period en

> On January 1, 2011, Cron Corporation issued $700,000 in bonds that mature in five years. The bonds have a stated interest rate of 13 percent and pay interest on June 30 and December 31 each year. Whenthe bonds were sold, the market rate of interest was 1

> On January 1, 2011, Vigeland Corporation issued $2,000,000 in bonds that mature in 10 years. The bonds havea stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. When the bondswere sold, the market rate of interest wa

> Electrolux Corporation manufactures electrical test equipment. The company’s board of directors authorizeda bond issue on January 1, 2011, with the following terms: Maturity (par) value: $800,000 Interest: 8 percent per annum payable each December 31 Mat

> On January 1, 2011, TCU Utilities issued $1,000,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 10 percent and pay interest on June 30 and December 31 each year. When thebonds were sold, the market rate of interest was 12 p

> On January 1, 2011, Thomas Insurance Corporation issued $4,000,000 in bonds that mature in five years. The bonds have a stated interest rate of 9 percent and pay interest on December 31 each year. When the bonds were sold, the market rate of interest was