Questions and Answers of Financial Accounting 13th Edition

During 2021, Smokey Corporation earned net income of $5.4 billion and paid off $2.5 billion of long-term notes payable. Smokey raised $1.1 billion by issuing common stock, paid $3.7 billion to
Waketown Marina needs to raise $2.0 million to expand the company. The company is considering issuing either:? $2,000,000 of 6% bonds payable to borrow the money;? 100,000 shares of common stock at
The Princeville Company has debt covenants on its bank loan. During the 15-year term of the loan, Princeville must comply with these covenants: a. Current ratio must be 1.25 or higher.b. Debt
At the end of fiscal year 2021, Hammond Legal Services and Delectable Doughnuts reported these adapted amounts on their balance sheets (all amounts in millions except for par value per
Identify the current liability associated with each of the following operating activities:1. Perform work on a warranty claim2. Pay income taxes3. Purchase supplies4. Pay payroll taxes5. Borrow money
On June 1, 2022, Franklin Company purchased inventory costing $90,000 by signing an 8%, nine-month, shortterm note payable. Franklin will pay the entire note (principal and interest) on the note’s
Alloy Corporation has 25,000 shares of $1.40 preferred stock outstanding in addition to its common stock. The $1.40 designation means that the preferred stockholders receive an annual cash dividend
On January 10, 2022, Mahlon Design Services purchased treasury stock at a cost of $26 million. On July 3, 2022, Mahlon resold some of the treasury stock for $11 million; this resold treasury stock
Toyama Corporation’s 2021 financial statements reported the following information, with 2020 figures shown for comparison (adapted, and in millions):Use the DuPont Model to calculate Toyama’s
On February 5, 2021, Festival Rental Corporation’s board of directors declared a dividend of $0.30, to be paid on March 18, 2021, to the shareholders of record as of the close of business on March
Glenwood Corporation earned net income of $90,000 during the year ended December 31, 2021. On December 15, Glenwood declared the annual cash dividend on its 1% preferred stock (13,000 shares with
Hometown Bancshares has 40,000 shares of $3 par value common stock outstanding. Suppose Hometown declares and distributes a 5% stock dividend when the market value of its stock is $15 per share.1.
The CEO and CFO from Lawrence Hotels, Inc., are reviewing company performance for 2021. The income statement reports a 25% increase in net income over 2020. However, most of the increase resulted
The stockholders’ equity of Bowling Green Uniforms as of December 31, 2021 and 2020, follows: Requirements 1. What is the par value of the common stock?2. How many shares of common stock
Thompson Turf Trimmers, Inc., reported the following financial statements for 2021: Calculate the following investing cash flows; enter all amounts in thousands.a. Acquisitions of plant assets
Elan Corporation accountants have assembled the following data for the year ended June 30, 2021: Prepare the operating activities section of Elan’s statement of cash flows for the year ended
To follow is an example of a worksheet containing the operating cash flow ratios for seven companies over a six-year period.Using the Excel file online in MyLab Accounting, apply the Formatting: Top
Westfall Industries began 2021 with its accounts receivable, inventory, and prepaid expenses totaling $50,000 and its total current liabilities totaling $36,000. At the end of the year, these same
Middleburg Golf Club, Inc., has assembled the following data for the year ended September 30, 2021: Prepare the operating activities section of Middleburg Golf Club’s statement of cash flows
Crater HVAC Systems is preparing its statement of cash flows (indirect method) for the year ended March 31, 2021. To follow, in no particular order, is a list of items that will be used in preparing
Smither Software Corp. has assembled the following data for the years ending December 31, 2021 and 2020.Requirement Prepare Smither’s statement of cash flows using the indirect method to
The 2021 and 2020 comparative balance sheets and 2021 income statement of Queen Supply Corp. follow:Queen Supply had no noncash investing and financing transactions during 2021. During the year,
To follow is an example of a worksheet containing the operating cash flow ratios for five companies over a six-year period. Using the Excel file online in MyLab Accounting, apply the Formatting:
To prepare the statement of cash flows, accountants for Dartmouth Electric Company have summarized 2021 activity in two accounts:Dartmouth Electric’s 2021 income statement and balance sheet data
Tally-Ho Horse Farms, Inc., began 2021 with cash of $170,000. During the year, Tally-Ho earned service revenue of $595,000 and collected $590,000 from customers. Expenses for the year totaled
The comparative balance sheets of Bedford Movie Theater Company at November 30, 2021 and 2020, reported the following: Bedford’s transactions during the year ended November 30, 2021,
To prepare the statement of cash flows, accountants for Ronklin Electric Company have summarized 2021 activity in two accounts:Ronklin Electric’s 2021 income statement and balance sheet data
Fortune Software Corp. has assembled the following data for the years ending December 31, 2021 and 2020: Requirement Prepare Fortune’s statement of cash flows using the indirect method to
The comparative balance sheets of American-Davis Design Studio, Inc., at June 30, 2021 and 2020, and transaction data for fiscal 2021 are as follows:Transaction data for the year ended June 30, 2021,
The 2021 and 2020 comparative balance sheets and 2021 income statement of Mercedes Supply Corp. follow: Mercedes Supply had no noncash investing and financing transactions during 2021. During
Luxe, Inc., reported the following in its financial statements for the year ended May 31, 2021 (in thousands): Requirement Determine the following cash receipts and payments for Luxe during
Delorme Specialties reported the following at December 31, 2021 (in thousands): RequirementDetermine the following items for Delorme Specialties during 2021:a. Gain or loss on the sale of
The 2021 income statement and the 2021 comparative balance sheet of Ghent River Camp, Inc., have just been distributed at a meeting of the camp’s board of directors. The directors raise a
Regan Corporation reported the following amounts on its 2021 comparative income statements: Perform a horizontal analysis of revenues, expenses, and net income—both in dollar amounts and in
The Metro 2021 income statement follows.Use the preceding income statement and the balance sheet from S12-6 to calculate the following:a. Metro’s rate of inventory turnover and days’ inventory
Sokolsky Designs reported the following amounts on its balance sheets at December 31, 2021, 2020, and 2019:Sales and profits are high. Nevertheless, Sokolsky is experiencing a cash shortage. Perform
The annual report of Salem Cars, Inc., for the year ended December 31, 2021, included the following items (in millions): 1. Calculate earnings per share (EPS) and the price-earnings ratio for
To follow is the 2021 income statement of Kurzic Imports, Inc.1. How much gross profit did Kurzic earn on the sale of its products in 2021? How much was income from continuing operations? How much
The following information is for Nature Lodge. What were the dollar amounts of change and the percentage of each change in Nature Lodge’s net working capital during 2021 and 2020? Is this trend
Jalbert Furniture Company has asked you to determine whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2021. To answer this question,
For 2021 and 2020, calculate return on sales, asset turnover, return on assets (ROA), leverage, return on common stockholders’ equity (ROE), gross profit percentage, operating income percentage,
Create a Microsoft Excel worksheet using Office 365. Enter the stock ticker of WMT in a cell and designate that cell as a stock data type. Add fields to the worksheet to answer the following
Palace Loan Company’s balance sheet at December 31, 2021, reports the following: During 2021, Palace Loan earned net income of $6,300,000. Calculate Palace Loan’s earnings per common share
Evaluate the common stock of Carver Distributing Company as an investment. Specifically, use the two common stock ratios to determine whether the common stock became more or less attractive during
The Calloway Book Company’s accounting records include the following for 2021 (in thousands): Requirements 1. Prepare Calloway Book Company’s single-step income statement for the year
The following information is for Leary Lodge. What were the dollar amount of change and the percentage of each change in Leary Lodge’s net working capital during 2021 and 2020? Is this trend
Evansville Furniture Company has asked you to determine whether the company’s ability to pay its current liabilities and long-term debts improved or deteriorated during 2021. To answer this
For 2021 and 2020, calculate return on sales, asset turnover, return on assets (ROA), leverage, return on common stockholders’ equity (ROE), gross profit percentage, operating income percentage,
Altar Loan Company’s balance sheet at December 31, 2021, reports the following: During 2021, Altar Loan earned net income of $6,200,000. Calculate Altar Loan’s earnings per common share
The Hooper Book Company’s accounting records include the following for 2021 (in thousands):Requirements1. Prepare Hooper Book Company’s single-step income statement for the year ended December
Evaluate the common stock of Tristan Distributing Company as an investment. Specifically, use the two common stock ratios to determine whether the common stock became more or less attractive during
Jamison Sports Authority purchased inventory costing $25,000 by signing a 12%, six-month, short-term note payable. The purchase occurred on January 1, 2021. Jamison will pay the entire note
North Boulder USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles, whichever comes first. Suppose North Boulder USA can expect warranty costs during the
EnviroFriend Structures, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,780 million. At December 31, 2021 and 2020, the company had, respectively, $656
Fitzgerald Company pays its employees every other Friday. December 31, 2020, was a Sunday. On Friday, January 5, 2021, Fitzgerald paid wages of $112,000, which covered the 14-day period from December
Wicker Sales, Inc.’s, comparative income statements and balance sheets show the following selected information for 2020 and 2021:Requirements1. Calculate the company’s accounts payable turnover
On August 1, 2022, The Shoppes at Mill Lake, Inc., purchased inventory costing $40,000 by signing a 6%, six-month, short-term note payable. The company will pay the entire note (principal and
Quimby Sports Authority purchased inventory costing $30,000 by signing a 6% short-term, one-year note payable. The purchase occurred on July 31, 2021. Quimby pays annual interest each year on July
Travis Publishing completed the following transactions for one subscriber during 2021: RequirementJournalize these transactions (explanations not required).Then report any liability on the
Centennial Publishing completed the following transactions for one subscriber during 2021: RequirementJournalize these transactions (explanations not required). Then report any liability on the
Sherlock Sports Authority purchased inventory costing $30,000 by signing a 4%, short-term, one-year note payable. The purchase occurred on July 31, 2021. Sherlock pays annual interest each year on
Barnacle Sales, Inc.’s, comparative income statements and balance sheets show the following selected information for 2020 and 2021: Requirements1. Calculate the company’s accounts payable
Green Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,770 million. At December 31, 2021 and 2020, the company had, respectively, $663 million
On September 1, 2022, The Shoppes at Forest Lake, Inc., purchased inventory costing $63,000 by signing an 8%, six-month, short-term note payable. The company will pay the entire note (principal and
Robson Electronics completed these selected transactions during March 2021: a. Sales of $2,050,000 are subject to an accrued warranty cost of 9%. The accrued warranty payable at the beginning of
Fresno Transportation owns a fleet of 50 semi-trucks. The original cost of the fleet was $7,500,000. Fresno uses straight-line depreciation for the fleet for accounting purposes, and MACRS
Diamond Security Systems’ revenues for 2021 totaled $27.5 million. As with most companies, Diamond is a defendant in lawsuits related to its products. Note 14 of the Diamond annual report for 2021
The following transactions of Smooth Sounds Music Company occurred during 2021 and 2022: Requirement1. Record the transactions in Smooth Sounds’ journal. Explanations are not required.
Western Electronics completed these selected transactions during March 2021: a. Sales of $2,400,000 are subject to an accrued warranty cost of 9%. The accrued warranty payable at the beginning
At December 31, 2021, Filbert Corporation’s adjusted trial balance shows the following balances:Filbert Corporation provides multi-year warranties with its products. Half of the Accrued Warranty
The following transactions of Melody Music Company occurred during 2021 and 2022:Requirement 1. Record the transactions in Melody Music Company’s journal. Explanations are not required.
At December 31, 2021, Jackson Corporation’s adjusted trial balance shows the following balances: Jackson Corporation provides multi-year warranties with its products. Half of the Accrued
Gravel Corporation borrowed $250,000 from a bank on January 1, 2022, by signing a 10%, six-month note. The journal entry made by Gravel on January 1, 2022, will debit.a. Interest Expense for $25,000
Tolbert Plumbing Products Ltd. reported the following data in 2021 (in millions):Compute Tolbert’s leverage ratio, debt ratio, and times-interest-earned ratio, and write a sentence to explain what
Examine the following selected financial information for The Deal Corporation and Simple Stores, Inc., as of the end of their fiscal years ending in 2021: 1. Complete the table, calculating all
Yancy Corp. issued 6% seven-year bonds payable with a face amount of $110,000 when the market interest rate was 6%. Yancy’s fiscal year-end is December 31. The bonds pay interest on January 1 and
Starlight Drive-Ins Ltd. borrowed money by issuing $5,000,000 of 7% bonds payable at 95.5 on July 1, 2021. The bonds are 10-year bonds and pay interest each January 1 and July 1.1. How much cash did
Windsor Company borrowed money by issuing $3,000,000 of 6% bonds payable at 102.9 on July 1, 2021. The bonds are five-year bonds and pay interest each January 1 and July 1.1. How much cash did
Regal, Inc., includes the following selected accounts in its general ledger at December 31, 2021: Prepare the liabilities section of Regal’s balance sheet at December 31, 2021, to show how the
Pearce Corporation issued $580,000 of 6%, 10-year bonds payable on March 31, 2022. The market interest rate at the date of issuance was 10%, and the bonds pay interest semiannually. Pearce
Leon Corporation issued $400,000 of 10%, 10-year bonds payable on January 1, 2022. The market interest rate at the date of issuance was 8%, and the bonds pay interest semiannually (on June 30 and
EnviroFriend Structures, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,780 million. At December 31, 2021 and 2020, the company had, respectively, $656
On January 31, 2021, Dunkin Logistics, Inc., issued five-year, 3% bonds payable with a face value of $8,000,000. The bonds were issued at 93 and pay interest on January 31 and July 31. Dunkin
Winter Ltd. is authorized to issue $2,500,000 of 4%, 10-year bonds payable. On December 31, 2021, when the market interest rate is 5%, the company issues $2,000,000 of the bonds. Winter amortizes
On June 30, 2021, the market interest rate is 9%. Ramsey Corporation issues $550,000 of 12%, 20-year bonds payable. The bonds pay interest on June 30 and December 31. The company amortizes bond
On January 1, 2020, Kittle Corporation issued five-year, 4% bonds payable with a face value of $2,500,000. The bonds were issued at 95 and pay interest on January 1 and July 1. Kittle amortizes bond
The board of directors of Mailroom Plus authorized the issue of $8,000,000 of 6%, 10-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31,
Robson Corporation issued 5%, 10-year bonds with a face value of $1,000,000 at a price of 98 on July 1, 2021. The bonds pay interest each January 1 and July 1. Robson uses the straight-line
Green Earth Homes, Inc., builds environmentally sensitive structures. The company’s 2021 revenues totaled $2,770 million. At December 31, 2021 and 2020, the company had, respectively, $663 million
Energy Ltd. is authorized to issue $3,000,000 of 1%, 10-year bonds payable. On December 31, 2021, when the market interest rate is 8%, the company issues $2,400,000 of the bonds. Energy amortizes
On June 30, 2021, the market interest rate is 9%. Randall Corporation issues $600,000 of 10%, 15-year bonds payable. The bonds pay interest on June 30 and December 31. The company amortizes bond
Cheyenne Company sells $400,000 of 14%, 10-year bonds for 92.613 on April 1, 2021. The market rate of interest on that day is 15.5%. Interest is paid each year on April 1.The entry to record the sale
On January 1, 2020, Ditchey Corporation issued five-year, 6% bonds payable with a face value of $3,500,000. The bonds were issued at 96 and pay interest on January 1 and July 1. Ditchey amortizes
Coldwell Transportation owns a fleet of 60 semi-trucks. The original cost of the fleet was $9,000,000. Coldwell uses straight-line depreciation for the fleet for accounting purposes, and MACRS
The accounting records of Burgess Foods, Inc., include the following items at December 31, 2021:Requirements 1. Show how each relevant item would be reported on the Burgess Foods classified
Holloway Corporation issued 8%, 10-year bonds with a face value of $2,000,000 at a price of 96 on July 1, 2021. The bonds pay interest each January 1 and July 1. Holloway uses the straight-line
Cheyenne Company sells $400,000 of 14%, 10-year bonds for 92.613 on April 1, 2021. The market rate of interest on that day is 15.5%. Interest is paid each year on April 1.Cheyenne Company uses the
On January 1, 2023, Fergus Corporation issued $800,000, 10%, five-year bonds. The bond interest is payable on January 1 and July 1. The bonds sold for $864,887. The market rate of interest when the
The board of directors of Canterbury Plus authorized the issue of $9,000,000 of 7%, 15-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31,
The Juice Company reported the following comparative information at December 31, 2021, and December 31, 2020 (amounts in millions and adapted): Requirements1. Calculate the following ratios for

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