Questions and Answers of Financial Accounting 6th Edition

Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on January 1, 2024. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid
January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether to purchase or lease the new equipment.Required:1. The company can
Selected financial data for Bahama Bay and Caribbean Key are as follows:Required:1. Calculate the debt to equity ratio for Bahama Bay and Caribbean Key for the most recent year. Which company has the
Selected financial data for Surf City and Paradise Falls are as follows: Calculate andRequired:1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which
Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $76,860 on January 1, 2024. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid
Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2024. Interest is paid annually on December 31.1. Record the bond issue on January 1, 2024.2.
On January 1, 2024, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.Required:Assuming the market interest rate on the
Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $64,008 on January 1, 2024. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid
On January 1, 2024, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.Required:Assuming the market interest rate on the
Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $76,799 on January 1, 2024. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.Required:Assuming the bonds issue for $600,000,
On January 1, 2024, Lizzy’s Lemonade issues 5%, 20-year bonds with a face amount of $100,000 for $88,443, priced to yield 6%. Interest is paid semiannually. What amount of interest expense will be
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.Required:Assuming the market interest rate on the
On January 1, 2024, Lyle’s Limeade issues 4%, 10-year bonds with a face amount of $90,000 for $82,985, priced to yield 5%. Interest is paid semiannually. What amount of interest expense will be
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.Required:Assuming the market interest rate on the
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.Required:Assuming the bonds issue for $600,000, record the bond
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.Required:Assuming the market interest rate on the issue date is
On January 1, 2024, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.Required:Assuming the market interest rate on the issue date is
On January 1, 2024, Splash City issues $500,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is
Surf’s Up, a manufacturer of surfing supplies and training equipment, has the following selected data ($ in millions):Based on these amounts, calculate the following ratios for 2024:1. Debt to
On January 1, 2024, Frontier World issues $41 million of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new
On January 1, 2024, Water World issues $26 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Water World intends to use the funds to build
On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances:During January 2024, the following transactions occur:January 1 Borrow $100,000 from Captive Credit
Refer to the information in BE9–1. Determine the financial statement effects of the issuance of the installment note and the first monthly payment.Data from in BE9-1On January 1, 2024, Corvallis
Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2024, 300 shares of preferred stock and 4,000 shares of common stock have been
Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2024, 125 shares of preferred stock and 3,000 shares of common stock have been issued.
Refer to the information in BE9–5. Determine the financial statement effects of the lease.Data from in BE9-5On April 1, 2024, Primer Corp. signs a five-year lease to use office space. The present
Refer to the information in BE9–8. Determine the financial statement effects of(1) The bond issue on January 1, 2024, and (2) The first interest payment on June 30, 2024.Data from in
Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit
Major Sports plans to raise $5,000,000 in an initial public offering of its common stock. The company is considering three options:a. Issue 100,000 shares of $1 par value common stock for $50 per
Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book.Required:1.
Refer to the information provided in P10–2A.Data from in P10-2ADonnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2024, 300
Refer to the information provided in P10–2B.Data from in P10-2BNautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2024, 125 shares of
Nathan’s Athletic Apparel has 2,000 shares of 5%, $100 par value preferred stock the company issued at the beginning of 2023. All remaining shares are common stock. The company was not able to pay
Renegade Clothing is struggling to meet analysts’ forecasts. It’s early December 2024, and the year-end projections are in. Listed below are the projections for the year ended 2024 and the
In its first five years of operations, Monster Hats reports the following net income and dividends (the first year is a net loss).Required:Calculate the balance of Retained Earnings at the end of
Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Abercrombie & Fitch Co. for the year ended February 1, 2020. Locate the “Consolidated
National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2024, National League’s
Major League Apparel has two classes of stock authorized: 6%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2024, its first year of
Consider each of the following independent situations:Required:For each situation, calculate the missing amount. a. b. C. d. Beginning Retained Earnings $320,000 $540,000 $290,000 Net Income for the
Rachel’s Designs has 2,000 shares of 7%, $50 par value cumulative preferred stock issued at the beginning of 2022. All remaining shares are common stock. Due to cash flow difficulties, the company
Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2024, its first year of
Refer to the information in E10–7. In its first year of operations, Finishing Touches has net income of $160,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2024. Power Drive has the
Refer to the situation described in BE10-8. Record the transaction if California Surf resells the 100 shares of treasury stock at $35 per share.Data from in BE10-8California Surf Clothing Company
Diamond Dresses began the year with a balance of $425,000 in Retained Earnings. During the year, the company had net income of $100,000 and declared no dividends. (a) Calculate the ending
Refer to the information in E10–12. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2024: Common Stock, $100,000; Additional
Refer to the information in E10–12. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2024: Common Stock, $100,000; Additional
United Apparel has the following balances in its stockholders’ equity accounts on December 31, 2024: Treasury Stock, $850,000; Common Stock, $600,000; Preferred Stock, $3,600,000; Retained
Refer to the information in BE10-3. Determine the financial statement effects of the issuance of common stock.Data from in BE10-3Western Wear Clothing issues 3,000 shares of its $0.01 par value
How is the stockholders’ equity section of the balance sheet different from the statement of stockholders’ equity?
The financial statements of Friendly Fashions include the following selected data (in millions):Required:1. Calculate the return on equity in 2024.2. Calculate the dividend yield in 2024.3. Calculate
Refer to the information in BE10-8. Determine the financial statement effects of the purchase of treasury stock.Data from in BE10-8California Surf Clothing Company issues 1,000 shares of $1 par value
Financial information for Forever 18 includes the following selected data:Required:1. Calculate earnings per share in 2023 and 2024. Did earnings per share increase in 2024?2. Calculate the
On January 1, 2024, the general ledger of Grand Finale Fireworks includes the following account balances:During January 2024, the following transactions occur:January 2 Issue an additional 2,000
Refer to the information in BE10-9. Determine the financial statement effects of the sale of treasury stock.Data from in BE10-9California Surf Clothing Company issues 1,000 shares of $1 par value
Refer to the information in BE10-10. Determine the financial statement effects of the sale of treasury stock.Data from in BE10-10California Surf Clothing Company issues 1,000 shares of $1 par value
Refer to the information in BE10-12. Determine the financial statement effects for (1) the declaration of dividends on October 1 and (2) the payment of dividends on October 31.Data from in
The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.Required:Prepare the statement of cash flows for the year ended December 31, 2025,
Seth Erkenbeck, a recent college graduate, has just completed the basic format to be used in preparing the statement of cash flows (indirect method) for ATM Software Developers. All amounts are in
Natalie King has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CPU Hardware Designers. All amounts are in thousands (000s).Below, in random
Portions of the financial statements for Software Associates are provided below.Required:Prepare the operating activities section of the statement of cash flows for Software Associates using the
Portions of the financial statements for Alliance Technologies are provided below.Required:Prepare the operating activities section of the statement of cash flows for Alliance Technologies using the
Ernie’s Electronics had the following transactions with Bert’s Bargain House:1. Ernie sold Bert land for $195,000. Ernie originally purchased the land for $180,000, resulting in a $15,000 gain
The income statement, balance sheets, and additional information for Video Phones, Inc., are provided.Required:Prepare the statement of cash flows using the indirect method. Disclose any noncash
The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.Required:Prepare the statement of cash flows using the indirect method. Disclose any noncash
Refer to the transactions between Ernie’s Electronics and Bert’s Bargain House recorded in E11–4.Data from in E11-4Ernie’s Electronics had the following transactions with Bert’s Bargain
Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Alphabet Inc. for the year ended December 31, 2019. Locate the “Consolidated Statements of
The balance sheets for Plasma Screens Corporation, along with additional information, are provided below:Required:Prepare the statement of cash flows using the indirect method. Assets Current
“Why can’t we pay our shareholders a dividend?” shouts your new boss at Polar Opposites. “This income statement you prepared for me says we earned $5 million in our first year!” You
Aggressive Corporation approaches Matt Taylor, a loan officer for Oklahoma State Bank, seeking to increase the company’s borrowings with the bank from $100,000 to $200,000. Matt has an uneasy
Cash flows from operating activities for both the indirect and direct methods are presented for Reverse Logic. All amounts are in thousands (000s).Required:Complete the following income statement for
Cash flows from operating activities for both the indirect and direct methods are presented for Electronic Transformations.Required:Complete the following income statement for Electronic
Bryan Eubank began his accounting career as an auditor for a Big 4 CPA firm. He focused on clients in the high-technology sector, becoming an expert on topics such as inventory write-downs, stock
Portions of the financial statements for Peach Computer are provided below.Required:Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect
On April 1, 2023, Teleworks Company lent $100,000 to IT Industries. IT Industries pays back in full the note plus 10% interest on April 1, 2024. Determine the investing cash flows to be reported by
The following summary transactions occurred during the year for Bluebonnet.Required:Calculate net cash flows from investing activities. Cash received from: Collections from customers Interest on
Technologies Worldwide purchased land for $850,000 in 2023 with the intent to expand operations. In 2024, the company decides the land is no longer needed, and the land is sold for $900,000.
Refer to the information in E11-10.Data from in E11-10The following summary transactions occurred during the year for Bluebonnet.Required:Calculate net cash flows from financing activities. Cash
Refer to the situation described in BE11–9. Determine the financing cash flows to be reported by IT Industries in 2024.Data from in BE11-9On April 1, 2023, Teleworks Company lent $100,000 to
Refer to the information provided for Peach Computer in E11–9.Data from in E11-9Portions of the financial statements for Peach Computer are provided below.Required:Prepare the operating activities
Mega Screens, Inc., reports net sales of $3,200,000, cost of goods sold of $2,000,000, and income tax expense of $150,000 for the year ended December 31, 2024. Selected balance sheet accounts are as
Game-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below.Required:1. Complete the “%” columns to be
Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement for each operating segment is presented below.Required:1. Complete the “%” columns to be used
Perform a vertical analysis on the following information. Cash Accounts receivable Inventory Long-term assets Total assets 2024 $
Income statement and balance sheet data for Great Adventures, Inc., are provided below.As you can tell from the financial statements, 2025 was an especially busy year. Tony and Suzie were able to use
The income statements for Anything Tennis for the years ending December 31, 2024 and 2023, are provided belowRequired:1. Complete the “Amount” and “%” columns to be used in a horizontal
The income statements for Federer Sports Apparel for 2025 and 2024 are presented below.Required:Prepare a vertical analysis of the data for 2025 and 2024. FEDERER SPORTS APPAREL Income Statements For
The income statements for Galaxy Tennis for the years ending December 31, 2024 and 2023, are provided below.Required:1. Complete the “Amount” and “%” columns to be used in a horizontal
The balance sheets for Sports Unlimited for 2024 and 2023 are provided below.Required:1. Prepare a vertical analysis of Sports Unlimited’s 2024 and 2023 balance sheets. Express each amount as a
The balance sheets for Fantasy Football for 2024 and 2023 are provided below.Required:1. Prepare a vertical analysis of Fantasy Football’s 2024 and 2023 balance sheets. Express each amount as a
Athletic World reports the following vertical analysis percentages.Did Athletic World’s income before tax as a percentage of sales increase, decrease, or stay the same? If net income as a
Refer to the information provided in E12–2.Data from in E12-2The income statements for Federer Sports Apparel for 2025 and 2024 are presented below.Required:Prepare a horizontal analysis for 2025
The following income statement and balance sheets for The Athletic Attic are provided.Required:Assuming that all sales were on account, calculate the following risk ratios for 2024:1. Receivables
Sales are $2.6 million in 2023, $2.7 million in 2024, and $2.5 million in 2025. What is the percentage change from 2023 to 2024? What is the percentage change from 2024 to 2025? Be sure to indicate
The balance sheets for Federer Sports Apparel for 2025 and 2024 are presented below.Required:1. Prepare a vertical analysis of the balance sheet data for 2025 and 2024. Express each amount as a
Data for Virtual Gaming Systems are provided in P12–4A. Earnings per share for the year ended December 31, 2024, are $1.40. The closing stock price on December 31, 2024, is $28.30.Data from in
Data for The Athletic Attic are provided in P12–4B. Earnings per share for the year ended December 31, 2024, are $1.36. The closing stock price on December 31, 2024, is $22.42.Data from in
Using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system), find the annual report (10-K) for Dick’s Sporting Goods for the year ended February 1, 2020. Locate the “Consolidated
If sales are $1,150,000 in 2025 and this represents a 15% increase over sales in 2024, what were sales in 2024?

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