Question: The stockholders’ equity of All-Star Uniforms

> Town Bank has $100,000 of 7% debenture bonds outstanding. The bonds were issued at 105 in 2012 and mature in 2032. Requirements 1. How much cash did Town Bank receive when it issued these bonds? 2. How much cash in total will Town Bank pay the bondholde

> On January 31, Doherty Logistics, Inc., issued five-year, 7% bonds payable with a face value of $8,000,000. The bonds were issued at 96 and pay interest on January 31 and July 31. Doherty Logistics, Inc., amortizes bonds by the straight-line method. Reco

> Assume that Banff Electronics completed these selected transactions during March 2012: a. Sales of $2,400,000 are subject to estimated warranty cost of 4%. The estimated warranty payable at the beginning of the year was $35,000, and warranty payments for

> Smith Security Systems’ revenues for 2012 totaled $25.8 million. As with most companies, Smith is a defendant in lawsuits related to its products. Note 14 of the Smith Annual Report for 2012 reported the following: 14. Contingencies The company is involv

> Geodesic Domes, Inc., builds environmentally sensitive structures. The company’s 2012 revenues totaled $2,800 million. At December 31, 2012, and 2011, the company had $661 million and $600 million in current assets, respectively. The De

> At December 31, 2012, Olsen Real Estate reported a current liability for income tax payable of $150,000. During 2013, Olsen earned income of $900,000 before income tax. The company’s income tax rate during 2013 was 29%. Also during 2013, Olsen paid incom

> Assume that Cranmore Company completed the following note-payable transactions. 2012 Apr 1 Purchased delivery truck costing $85,000 by issuing a one-year, 8% note payable. Dec 31 Accrued interest on the note payable. 2013 Apr 1 Paid the note payable at m

> How many shares of common stock did Buffalo Bell have outstanding, on average, during 2012? a. 1,880 million b. 137.9 million c. 20.1 million d. 35,147 million Buffalo Bell Corporation Consolidatcd Statements of Financial Position (In millions) Dec

> Perrin Talent Search has an annual payroll of $150,000. In addition, the company incurs payroll tax expense of 8%. At December 31, Perrin owes salaries of $7,500 and FICA and other payroll tax of $700. The company will pay these amounts early next year.

> Worldwide Publishing completed the following transactions for one subscriber during 2012: Oct 1 Sold a one-year subscription, collecting cash of $2,400, plus sales tax of 9%. Nov 15 Remitted (paid) the sales tax to the state of Massachusetts. Dec 31 Made

> The accounting records of Earthtone Ceramics included the following balances at the end of the period: In the past, Earthtone’s warranty expense has been 8% of sales. During 2012, the business paid $7,000 to satisfy the warranty claim

> Regal, Inc., includes the following selected accounts in its general ledger at December 31, 2012: Bonds payable................................................................................................................ $375,000 Equipment............

> Evensen Plumbing Products Ltd. reported the following data in 2012 (in millions): ______________________2012 Net operating revenues................ $ 29.1 Operating expenses......................... 25.0 Operating income.............................. 4.

> Wavetown Marina needs to raise $1 million to expand the company. Wavetown Marina is considering the issuance of either ▶ $1,000,000 of 7% bonds payable to borrow the money, or ▶ 100,000 shares of common stock at $10 per share. Before any new financing, W

> Examine the following selected financial information for Best Buy Co., Inc., and Wal-Mart Stores, Inc., as of the end of their 2010 fiscal years: 1. Complete the table, calculating all the requested information for the two companies. 2. Evaluate each c

> Starlight Drive-Ins Ltd. borrowed money by issuing $3,000,000 of 8% bonds payable at 97.5 on July 1, 2012. The bonds are 10-year bonds and pay interest each January 1 and July 1. 1. How much cash did Starlight receive when it issued the bonds payable? Jo

> Use the amortization table that you prepared for EKU’s bonds in Short Exercise 9-9 to answer the following questions: 1. How much cash did EKU borrow on March 31, 2012? How much cash will EKU pay back at maturity on March 31, 2022? 2. How much cash inte

> EKU, Inc., issued $560,000 of 6%, 10-year bonds payable at a price of 80.5 on March 31, 2012. The market interest rate at the date of issuance was 9%, and the EKU bonds pay interest semiannually. 1. Prepare an effective-interest amortization table for th

> Buffalo Bell’s trend of return on sales is a. Worrisome. b. Declining. c. Stuck at 22.1%. d. Improving. Buffalo Bell Corporation Consolidatcd Statements of Financial Position (In millions) December 31, 2012 2011 Assets: Current As

> Hunter Corp. issued 7-year bonds payable with a face amount of $125,000 when the market interest rate was 8%. Assume that the accounting year of Hunter ends on December 31 and that bonds pay interest on January 1 and July 1. Journalize the following tran

> Compute the price of the following bonds: a. $200,000 issued at 77.75 b. $200,000 issued at 103.50 c. $200,000 issued at 94.25 d. $200,000 issued at 102.50

> Tony Chase, Inc., the motorcycle manufacturer, included the following note in its annual report: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 (In Part): Commitments and Contingencies The Company self-insures its product liability losses in the United Sta

> Refer to the data given in Short Exercise 9-3. What amount of warranty expense will Trail Runner USA report during 2012? Which accounting principle addresses this situation? Does the warranty expense for the year equal the year’s cash payments for warran

> Trail Runner USA guarantees tires against defects for five years or 55,000 miles, whichever comes first. Suppose Trail Runner USA can expect warranty costs during the five-year period to add up to 5% of sales. Assume that a Trail Runner USA dealer in Atl

> Wardlow Sales, Inc.’s comparative income statements and balance sheets show the following selected information for 2011 and 2012: Requirements 1. Calculate the company’s accounts payable turnover and days payable out

> Is the payment of the face amount of a bond on its maturity date regarded as an operating activity, an investing activity, or a financing activity? a. Financing activity b. Operating activity c. Investing activity

> The journal entry on the maturity date to record the payment of $1,500,000 of bonds payable that were issued at a $70,000 discount includes a. A debit to Discount on Bonds Payable for $70,000. b. A credit to Cash for $1,570,000. c. A debit to Bonds Payab

> Amortizing the discount on bonds payable a. Is necessary only if the bonds were issued at more than face value. b. Reduces the carrying value of the bond liability. c. Increases the recorded amount of interest expense. d. Reduces the semiannual cash paym

> Using the facts in the preceding question, McPherson’s journal entry to record the interest expense on July 1, 2012, will include a a. Debit to Bonds Payable. b. Credit to Interest Expense. c. Credit to Discount on Bonds Payable. d. Debit to Premium on B

> Buffalo Bell’s long-term debt bears interest at 11%. During the year ended December 31, 2012, Bell’s times-interest-earned ratio was a. 137.9 times. b. $35,147. c. 108 times. d. 20.1 times. Buffalo Bell Corporati

> McPherson Corporation issued $400,000 of 10%, 20-year bonds payable on January 1, 2012, for $295,000. The market interest rate when the bonds were issued was 14%. Interest is paid semiannually on January 1 and July 1. The first interest payment is July 1

> Sunny Day Company uses the straight-line amortization method. The amount of interest expense for each year will be a. $60,000. b. $53,200. c. $54,000. d. $52,000. e. none of these. Sunny Day Company sells $400,000 of 13%, 10-year bonds for 97 on April 1

> The entry to record the sale of the bonds on April 1 would be as follows: Sunny Day Company sells $400,000 of 13%, 10-year bonds for 97 on April 1, 2012. The market rate of interest on that day is 13.5%. Interest is paid each year on April 1. a. Ca

> What type of account is Discount on Bonds Payable and what is its normal balance? a. Contra liability; Credit b. Contra liability; Debit c. Adjusting account; Credit d. Reversing account; Debit

> Bond carrying value equals Bonds Payable a. Minus Premium on Bonds Payable. b. Plus Discount on Bonds Payable. c. Plus Premium on Bonds Payable. d. Minus Discount on Bonds Payable. e. Both a and b f. Both c and d

> A bond with a face amount of $10,000 has a current price quote of 102.875. What is the bond’s price? a. $10,287.50 b. $10,102.88 c. $1,028,750 d. $1,028.75

> Moment’s Fashions has a debt that has been properly reported as a long-term liability up to the present year (2012). Some of this debt comes due in 2012. If Moment’s Fashions continues to report the current position as a long-term liability, the effect w

> Myron, Inc., manufactures and sells computer monitors with a three-year warranty. Warranty costs are expected to average 7% of sales during the warranty period. The following table shows the sales and actual warranty payments during the first two years o

> An end-of-period adjusting entry that debits Unearned Revenue most likely will credit a. A revenue. b. An asset. c. An expense. d. A liability.

> What kind of account is Unearned Revenue? a. Revenue account b. Expense account c. Liability account d. Asset account

> Buffalo Bell’s inventory turnover during fiscal year 2012 was a. $35,147. b. Very slow. c. 83 times. d. 137.9 times. Buffalo Bell Corporation Consolidatcd Statements of Financial Position (In millions) December 31, 2012 2011 Asset

> Mega Planes Warehouse operates in a state with a 6.5% sales tax. For convenience, Mega Planes Warehouse credits Sales Revenue for the total amount (selling price plus sales tax) collected from each customer. If Mega Planes Warehouse fails to make an adju

> Failure to accrue interest expense results in a. An overstatement of net income and an understatement of liabilities. b. An understatement of net income and an overstatement of liabilities. c. An overstatement of net income and an overstatement of liabil

> For the purpose of classifying liabilities as current or noncurrent, the term operating cycle refers to a. The average time period between business recessions. b. The time period between date of sale and the date the related revenue is collected. c. A pe

> Business is going well for Park ‘N Fly, the company that operates remote parking lots near major airports. The board of directors of this family-owned company believes that Park ‘N Fly could earn an additional $1.5 million income before interest and taxe

> Gordon Sports Authority purchased inventory costing $11,000 by signing a 12% short-term note payable. The purchase occurred on July 31, 2012. Gordon pays annual interest each year on July 31. Journalize the company’s (a) Purchase of inventory; (b) Accrua

> When Is A Lease a Capital Idea? Laurie Gocker, Inc., entered into a lease arrangement with Nathan Morgan Leasing Corporation for an industrial machine. Morgan’s primary business is leasing. The cash purchase price of the machine is $1,000,000. Its econom

> Refer to RadioShack Corporation’s consolidated financial statements in Appendix B at the end of this book. These financial statements report a number of liabilities. 1. The current liability section of RadioShack Corporation’s Consolidated Balance Sheet

> Refer to Amazon.com, Inc.’s consolidated financial statements in Appendix A at the end of this book. 1. Did accounts payable for Amazon.com, Inc., increase or decrease in 2010? Calculate accounts payable turnover. How many days does it take Amazon.com, I

> Blue Company’s net income and net sales are $38,000 and $900,000, respectively, and average total assets are $250,000. What is Blue’s return on assets? a. 15.2% b. 27.8% c. 17.2% d. 4.2%

> Buffalo Bell’s days’ sales in average receivables during 2012 was a. 137.9 days. b. 20.1 days. c. 35 days. d. 25 days. Buffalo Bell Corporation Consolidatcd Statements of Financial Position (In millions) December

> Which of the following statements is not true about a 3-for-1 stock split? a. Total stockholders’ equity increases. b. Par value is reduced to one-third of what it was before the split. c. Retained Earnings remains the same. d. The market price of each s

> A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal to a. The book value of the shares to be issued. b. The excess of the market price over the original issue price of the shares to be issued. c. The par value of the

> Which of the following is not true about a 10% stock dividend? a. Total stockholders’ equity remains the same. b. Paid-in Capital increases. c. Par value decreases. d. Retained Earnings decreases. e. The market value of the stock is needed to record the

> Assume the same facts as in question 66. What is the amount of dividends per share on common stock? a. $4.50 b. $11.00 c. $8.00 d. $9.00 e. None of these

> A corporation has 50,000 shares of 1% preferred stock outstanding. Also, there are 50,000 shares of common stock outstanding. Par value for each is $100. If a $450,000 dividend is paid, how much goes to the preferred stockholders? a. None b. $4,500 c. $5

> Toni’s Foods has outstanding 300 shares of 2% preferred stock, $100 par value; and 1,900 shares of common stock, $20 par value. Toni’s declares dividends of $18,200. The correct entry is which of the following? Di

> Stockholders are eligible for a dividend if they own the stock on the date of a. Issuance. b. Record. c. Payment. d. Declaration.

> A company purchased 100 shares of its common stock at $49 per share. It then sells 75 of the treasury shares at $58 per share. The entry to sell the treasury stock includes a a. Credit to Cash for $4,350. b. Credit to Paid-in Capital, Treasury Stock for

> When treasury stock is sold for less than its cost, the entry should include a debit to a. Gain on Sale of Treasury Stock. b. Loss on Sale of Treasury Stock. c. Retained Earnings. d. Paid-in Capital in Excess of Par

> A company paid $26 per share to purchase 500 shares of its common stock as treasury stock. The stock was originally issued at $10 per share. The journal entry to record the purchase of the treasury stock is which of the following? a. Treasury Stock

> Buffalo Bell’s common-size income statement for 2012 would report cost of goods sold as a. 137.9%. b. $35,147 million. c. Up by 20.1%. d. 82.4%. Buffalo Bell Corporation Consolidatcd Statements of Financial Position (In millions)

> Aqua Sport’s net income for the period is $119,300 and beginning common stockholders’ equity is $681,200. Calculate Aqua Sport’s return on common stockholders’ equity. a. 16.8% b. 18

> What is total stockholders’ equity for Aqua Sport, Inc.? a. $719,900 b. $725,600 c. $731,300 d. $654,000 e. None of the above These account balances at December 31 relate to Aqua Sport, Inc.: Accounts Payable. Accounts Receivable.

> What is total paid-in capital for Aqua Sport, Inc.? a. $659,700 b. $648,300 c. $725,600 d. $654,000 e. None of the above These account balances at December 31 relate to Aqua Sport, Inc.: Accounts Payable. Accounts Receivable.. $ 51,400 81,950 Paid-

> Which of the following classifications represents the most shares of common stock? a. Issued shares b. Outstanding shares c. Authorized shares d. Treasury shares e. Unissued shares

> Preferred stock is least likely to have which of the following characteristics? a. Preference as to dividends b. The right of the holder to convert to common stock c. Preference as to assets on liquidation of the corporation d. Extra liability for the pr

> The paid-in capital portion of stockholders’ equity does not include a. Paid-in Capital in Excess of Par Value. b. Common Stock. c. Preferred Stock. d. Retained Earnings.

> Par value a. Is established for a share of stock after it is issued. b. Represents the original selling price for a share of stock. c. Is an arbitrary amount that establishes the legal capital for each share. d. May exist for common stock but not for pre

> Home Team, Inc., issues 280,000 shares of no-par common stock for $15 per share. The journal entry is which of the following? Cash 4,200,000 a. Common Stock 280,000 Gain on the Sale of Stock 3,920,000 b. Cash 4,200,000 Common Stock 4,200,000 Cash 4,

> At December 31, 2000, Enron Corporation reported the following data (condensed in millions): Total assets ................................................... $65,503 Total liabilities ................................................ 54,033 Stockholders’

> United Parcel Service (UPS), Inc., had the following stockholders’ equity amounts on December 31, 2012 (adapted, in millions): Common stock and additional paid-in capital; 1,135 shares issued............... $ 278 Retained earnings........................

> Using the earliest year available as the base year, the trend percentage for Buffalo Bell’s net revenue during 2012 was a. 121%. b. Up by 21.1% c. 137%. d. Up by $11,555 million. Buffalo Bell Corporation Consolidatcd Statements of

> Use the RadioShack Corporation consolidated financial statements in Appendix B at the end of this book to address the following questions. 1. Perform a trend analysis of RadioShack Corporation’s net sales, gross profit, operating income, and net income.

> If the euro depreciates against the U.S. dollar, can a dollar buy more or fewer euros as a result?

> Two investors are evaluating GE’s stock for possible purchase. They agree on the expected value of D1 and on the expected future dividend growth rate. Further, they agree on the riskiness of the stock. However, one investor normally holds stocks for 2 ye

> If you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gains yield be influenced by the firm’s decision to pay more dividends

> You borrow $85,000; the annual loan payments are $8,273.59 for 30 years. What interest rate are you being charged?

> What is the present value of a $100 perpetuity if the interest rate is 7%? If interest rates doubled to 14%, what would its present value be?

> If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money?

> British pounds sell for $2 (U.S.) per pound, what should dollars sell for in pounds per dollar?

> If the United States imports more goods from abroad than it exports, foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign inve

> Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds?

> Hook Industries’ capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $2.00 dividend per share (D0 = $2.00). The stock’s price is currently $24.75, its dividend is expected to g

> WACC The Patrick Company’s cost of common equity is 16%, its before-tax cost of debt is 13%, and its marginal tax rate is 40%. The stock sells at book value. Using the following balance sheet, calculate Patrick’s WACC.

> Patton Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. It’s before-tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P0 = $22.50. The last dividend was D0 =

> The Evanec Company’s next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share. a. What is Evanec’s cost of retained earnings, rs? b. What is Ev

> Percy Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to maturity on the company’s outstanding bonds is 9%, and its tax rate is 40%. Percy’s CFO estimates that the company’s WACC is 9.96%. What

> The Heuser Company’s currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Heuser’s after-tax co

> Trivoli Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $97.00; but flotation costs will be 5% of the market price, so the net price will be $92.15 per share. What is the cost of the preferr

> Gamma Medical’s stock trades at $90 a share. The company is contemplating a 3-for-2 stock split. Assuming that the stock split will have no effect on the market value of its equity, what will be the company’s stock price following the stock split?

> Is the following equation correct for finding the value of a constant growth stock? Explain. Do Po r, +g 6.

> Martell Mining Company’s ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company’s earnings and dividends are declining at the constant rate of 5% per ye

> What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

> Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value is $100. a. What is the stock’s value? b. Suppose interest rates rise and pull the preferred stock’s yield up to 12%. What is

> What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $60, (b) $80, (c) $100, and (d) $140?

> Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays a dividend of $5 at the end of each year. What is the required rate of return?

> Harrison Clothiers’ stock currently sells for $20.00 a share. It just paid a dividend of $1.00 a share (that is, D0 = $1.00). The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the requ

> Thomas Brothers is expected to pay a $0.50 per share dividend at the end of the year (that is, D1 = $0.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the stock’s curren

> Why do U.S. corporations build manufacturing plants abroad when they can build them at home?