Questions and Answers of Financial Accounting 6th Edition

A firm uses the indirect method. Using the following information, what is its net cash flow from operating activities?Net income
Year 1: Noreen Company issues 10,000 shares of its no-par common stock for $30/share in cash.Year 2: Noreen Company buys 1,000 shares of its no-par common stock for $28/share in cash.Year 3: Noreen
Lipe Company reports the following transactions relating to its stock accounts.Feb. 20 Issued 10,000 shares of $1 par value common stock at $25 cash per share.Feb. 21 Issued 15,000 shares
Bonner Company began business this year and immediately sold 600,000 common shares for $18.000.000 cash and paid $1,000,000 in common dividends. At midyear, the firm bought back some of its own
JetBlue Airways Corporation reports the following data in its 2016 10-K. The data relate to the corporation's computation of its earnings per share calculations. (Dollar and share data are in
Merck & Co., Inc., reported net income attributable to Merck & Co., Inc., of $2,394 million for the 2017 fiscal year. Its 2017 10-K report contained the following information regarding its
Siemens AG reports the following basic and diluted earnings per share in its 2018 annual report.a. Describe the accounting definitions for basic and diluted earnings per share.b. Identify the Siemens
Kingery Corporation began the calendar (and fiscal) year with a simple structure consisting of 38,000 shares of common stock outstanding. On May 1, 10,000 additional shares were issued, and another
During 2018, Park Corporation had 50,000 shares of $10 par value common stock and 10,000 shares of 8%, $50 par value convertible preferred stock outstanding. Each share of preferred stock may be
Watts Corporation has 40,000 shares of $10 par value common stock outstanding and retained earnings of $820,000. The company declares a 100% stock dividend. The market price at the declaration is $17
Dechow Company has outstanding 20,000 shares of$50 par value, 6% cumulative preferred stock, and 80,000 shares of$10 par value common stock. The company declares and pays cash dividends amounting to
Use the following data to prepare the 2019 retained earnings reconciliation for Maffett Company.Total retained earnings, December 31, 2018 .................. $347,000Stock dividends declared and paid
On September 1, Weiss Company has 250,000 shares of $15 par value ($ 165 market value) common stock that are issued and outstanding. Its balance sheet on that date shows the following account
Dutta Corp. has outstanding 70,000 shares of $5 par value common stock. At year-end, the company declares and issues a 4% common stock dividend when the market price of the stock is $21 per share.a.
Freid Corp. has outstanding 6,000 shares of $50 par value, 6% preferred stock, and 40,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company
In its second quarter 2018 10-Q, Aflac Incorporated included the following information:Stock split: On February 13, 2018, the Board of Directors of the Parent Company declared a two-for-one stock
Following is the stockholders' equity section from the Toyota Motor Corporation's balance sheets for the 2018 fiscal year, which ended on March 31, 2018.a. Toyota has repurchased 353,073,500 shares
Zeller Corporation began 2018 with 120,000 shares of common stock and 16,000 shares of convertible preferred stock outstanding. On March 1 an additional 10,000 shares of common stock were issued. On
On January 1, 2019, Bartov Company issues 5,000 shares of $100 par value preferred stock at $250 cash per share. On March 1, the company repurchases 5,000 shares of previously issued $1 par value
On September 1. Magliolo, Inc .. (a) issues 18.000 shares of $10 par value preferred stock at $48 cash per share and (b) issues 120.000 shares of $2 par value common stock at $37 cash per share.a.
On June 1. Beatty Corp. issues (a) 8.000 shares of $50 par value preferred stock at $68 cash per share and it issues (b) 12,000 shares of $1 par value common stock at $10 cash per share.a. Do these
Describe the accounting for a convertible bond. Would this accounting ever result in the recognition of a gain in the income statement?
What is a stock option vesting period? How does the vesting period affect the recognition of compensation expense for stock options?
What items are typically reported under the stockholders' equity category of other comprehensive income (OCI)?
What information is reported in a statement of stockholders· equity'?
Employee stock options have a potentially dilutive effect on earnings per share (EPS) that is recognized in the diluted EPS computation. What can companies do to offset these dilutive effects and how
What is the difference between the accounting for a small stock dividend and the accounting for a large stock dividend'!
What is a stock dividend? How does a common stock dividend distributed to common shareholders affect their respective ownership interests?
If a corporation purchases 600 shares of its own common stock at $10 per share and resells them at $14 per share. where would the $2.400 increase in capital be reported in the financial statements?
Define treasury stock. Why might a corporation acquire treasury stock? How is treasury stock reported in the balance sheet?
Define stock split. What are the major reasons for a stock split'?
How does the account "additional paid-in capital" (APIC) arise? What inferences. if any. can you draw from the amount of APIC as reported on the balance sheet relative to the common stock amount in
Describe the difference between contributed capital and earned capital. Specifically, how can earned capital be considered as an investment by the company's shareholders'!
What features make preferred stock similar to debt? Similar to common stock?
Distinguish between authorized stock and issued stock. Why might the number of shares issued be more than the number of shares outstanding?
What is meant by dividend arrearage on preferred stock? If dividends are two years in arrears on $500.000 of 6% preferred stock. and dividends arc declared at the end of this year, what amount of
What are the basic differences between preferred stock and common stock? What are the typical features of preferred stock?
Define par value stock. What is the significance of a stock's par value from an accounting and analysis perspective?
Carter Inc. began operations in 2019. The company reported $130,000 of depreciation expense on its 2019 income statement and $128,000 in 2020. Carter Inc. deducted $140,000 for depreciation on its
Lynch Company began operations in 2019. The company reported $24,000 of depreciation expense on its income statement in 2019 and $26,000 in 2020. On its tax returns, Lynch deducted $32,000 for
Deere & Company reports the following tax information in its fiscal 2018 financial report. The provision for income taxes by taxing jurisdiction and by significant component consisted of the
Johnson and Johnson reports the following pension footnote as part of its 2017 10-K report.a. Describe what is meant by service cost and interest cost.b. What is the actual return on pension
Hoopes Corporation 's December 31, 2019, 10-K report has the following disclosures related to its retirement plans. The following table provides a reconciliation of the changes in the pension plans'
Cisco Systems, Inc., reports the following in the Commitments and Contingencies note to their 10-K for the year ended July 2018. Purchase Commitments with Contract Manufacturers and Suppliers:We
Explain the process of posting.
On January 2, 2019, Verdi Company acquired a machine for $85,000. In addition to the purchase price, Verdi spent $2,000 for shipping and installation, and $2,500 to calibrate the machine prior to
Sloan Company uses its own executive charter plane that originally cost $800,000. It has recorded straight-line depreciation on the plane for six full years, with an $80,000 expected salvage value at
In 2019, Eldenburg Mining Company purchased land for $7,200,000 that had a natural resource reserve estimated to be 500,000 tons. Development and road construction costs on the land were $420,000.
Zeibart Company purchases equipment for $225,000 on July1, 2016, with an estimated useful life of 10 years and expected salvage value of $25,000. Straight-line depreciation is used. On July1, 2020,
The following information was provided in the 2018 10-K of Hilton Worldwide Holdings, Inc.Note 7: Property and Equipment (S millions)Note 7 also revealed that depreciation expense on property and
The following disclosures were provided by Siemens AG in its 2018 annual report:Product-related expenses:Provisions for estimated costs related to product warranties are recorded in line item Cost of
Lunar, Inc., plans to issue $900,000 of I 0% bonds that will pay interest semiannually and mature in 5 years. Assume that the effective interest rate is 12% per year compounded semiannually. Compute
On December 31, 2018, Kasznik, Inc., issued $720,000 of 11%, 10-year bonds for $678,708, yielding an effective interest rate of 12%. Semiannual interest is payable on June 30 and December 31 each
Under the new lease accounting standard, what are the financial reporting differences between an operating lease and a finance lease? Explain.
For comparative purposes, when the old lease standard was in effect, were footnote disclosures sufficient to overcome nonrecognition on the balance sheet of assets and related liabilities for
ls the expense of a lease over its entire life the same whether it is a finance or an operating lease? Explain.
What are the economic and accounting differences between a defined contribution plan and a defined benefit plan?
Under what circumstances will a company report a net pension asset? A net pension liability?
What are the components of pension expense that is reported in the income statement?
What effect does the use of expected returns on pension investments and the deferral of unexpected gains and losses on those investments have on income?
How is the initial valuation determined for lease liability and the right-of-use asset for both an operating lease and a finance lease?
Over what time period should the cost of providing retirement benefits to employees be expensed?
What is the conceptual reason why income tax expense on the income statement is not equal to cash taxes paid?
Under what circumstances would a tax payment be made that also requires the recording of a deferred tax asset or liability?
Explain what an unrecognized tax benefit is and where it is recorded on the balance sheet.
On January1, 2020, Weber, Inc., entered into two lease contracts. The first lease contract was a six-year lease for computer equipment with $15,000 annual lease payments due at the end of each year.
Redo Mini-Exercise M10-16 but now assume the payments are made on January 1 of each year (including the first year January 1, 2020).Data from M10-16:On January1, 2020, Samuels, Inc., purchased a
On January1, 2020, Samuels, Inc., purchased a building for $2 million to be leased. The building is expected to have a 45-year life with no salvage value. The building was leased immediately by Verdi
Exxon Mobil Corporation discloses the following information in its pension footnote in its 10-K report:a. How much pension expense does Exxon Mobil Corporation report in its 2017 income statement?b.
Bartov Corporation has a defined contribution pension plan for its employees. Each year, Bartov contributes to the plan an amount equal to 4% of the employee payroll for the year. Bartov's 2019
Abercrombie & Fitch Co. discloses the following footnote relating to its retirement plans in its 2017 10-K report:16. SAVINGS AND RETIREMENT PLANS: The Company maintains the Abercrombie
Nike, Inc., reports the following information relating to its manufacturing activities in the footnotes to its 2018 10-K report:We are supplied by 124 footwear factories located in 13 countries. The
Fisk. Inc., purchased $600.000 of construction equipment on January1, 2019. The equipment is being depreciated on a straight-line basis over six years with no expected salvage value. MACRS
Target Corporation provides the following footnote relating to its retirement plans in its 2017 10-K report:Defined Contribution Plans:Team members who meet eligibility requirements can participate
Core Co. leased a piece of manufacturing equipment from E-So Co. with the following term????:Annual lease payment. . . . . . . . . . . . . . $1,100,000Term of lease:. . . . . . . . . . . . . . . . .
JetBlue's balance sheet and discussion of the new lease standard is as follows in their 2018 10-K:In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) of the Codification, which requires
Verizon Communications Inc. provides the following balance sheet (excerpted and abbreviated) and discussion and disclosure of leases:The aggregate minimum rental commitments under noncancelable
Under Armour, Inc., provides the following disclosure in the notes to its 2018 financial statements:7. Commitments and Contingencies (excerpts only):Sports Marketing and Other Commitments:Within the
Apple Inc. provides the following dis closure in the notes to its 2018 financial statements:Other Off-Balance-Sheet Commitments Unconditional Purchase Obligations:The Company has entered into certain
Verizon Communications Inc. reports the following pension data in its 2017 10-K report.a. Describe what is meant by service cost and interest cost.b. What is the source of funds to make payments to
Early in January 2019, Oler, Inc., purchased equipment costing $16,000. The equipment had a 2-year useful life and was depreciated in the amount of $8,000 in 2019 and 2020. Oler deducted the entire
Nike, Inc., reports the following tax information in the notes to its 2018 financial report. Income before income taxes is as follows:The provision for income taxes is as follows:Nike also states the
The Boeing Company reports the following tax information in its 2018 financial report.a. Record Boeing's provision for income taxes for 2018 using the financial statement effects template.b. Record
United Continental Holdings, Inc., did not adopt the new lease standard in 2018 but provides the following disclosure its 2018 10-K report($ millions).The adoption of the New Lease Standard primarily
Access the fiscal 2017 10-K for Nike at the SEC's EDGAR database or financial reports (www.sec.gov). Using its consolidated statement of stockholders' equity, prepare a table similar to Exhibit 1.9
In 2017, Colgate-Palmolive Company reported sales revenue of $15.454 million and cost of goods sold of $6.099 million. Its net income was $2.024 million. Calculate gross profit and prepare an income
Following is selected financial information for Tesla,REQUIRED:Prepare balance sheets, income statements and cash flow statements for the years ended December 31,2017 and 2016. Dec. 31, 2016 $
Best Buy Co., Inc., reported the following amounts in its February 3, 2018, and January 28, 2017, financial statements.REQUIRED:a. Prepare an income statement for Best Buy for the year ended February
Starbucks Corporation reported the following data in its 2018 and 2017 10-K reports.REQUIRED:a. Prepare income statements for Starbucks for the years ended September 30, 2018, and October1,2017. Use
Refer to the transactions in M2-3I. Set up T-accounts for each of the accounts referenced by the transactions and post the amounts for each transaction to those T-accounts.M2-31: Balance Sheet Income
Review the following selected income statement and balance sheet data from the fiscal years ending in 2017 and 2018.REQUIRED:a. Compare and discuss how these companies finance their operations.b.
Selected income statement information for Siemens AG, a global technology company, for four fiscal years follows:REQUIREDa. Compute the missing amounts for each of the four years shown.b. Compute the
The records of Geyer, Inc., show the following information after all transactions are recorded for 2018.Geyer, Inc., raised $1,400 cash through the issuance of additional common stock during this
Schrand Aerobics, Inc., rents studio space (including a sound system) and specializes in offering aerobics classes. On January 1, 2019, its beginning account balances are as follows: Cash,
Use the information in Problem 2-67 to complete the following requirements.REQUIRED:a. Prepare journal entries for each of the transactions 1 through 10.b. Set up T-accounts, including beginning
Kross, Inc., provides appraisals and feasibility studies. On January 1, 2019, its beginning account balances are as follows: Cash, $6,700; Accounts Receivable, $14,800; Notes Payable, $2,500;
Use the information in Problem 2-69 to complete the following requirements.REQUIREDa. Prepare journal entries for each of the transactions 1 through 11.b. Set up T-accounts, including beginning
Sarah Penney operates the Wildlife Picture Gallery, selling original art and signed prints received on consignment (rather than purchased) from recognized wildlife artists throughout the country.The
Andrea Frame and her supervisor are sent on an out-of-town assignment by their employer. At the supervisor's suggestion, they stay at the Spartan Inn (across the street from the Luxury Inn). After
What are the five major steps in the accounting cycle? List them in their proper order.

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