Questions and Answers of Financial Accounting Tool

Assume the same information as BEG.13 except that the discount rate is 12% instead of 10%. In this case, how much can Dempsey expect to receive from the sale of these bonds?
f Coho Company had net income of $382,800 in 2022 and it experienced a 16% increase in net income over 2021, what was its 2021 net income?
Refer to the financial statements and the Notes to Consolidated Financial Statements of Tootsie Roll Industries in Appendix A.Instructions Answer the following questions:(a) What were the total cost
The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A.Instructions(a) Based on the information in these
The April 5, 1999, issue of The Wall Street Journal includes an article by Tara Parker-Pope entitled “Stopping Diaper Leaks Can Be Nasty Business, P&G Shows Its Rivals.”Instructions Read the
Merck & Co., Inc., and Johnson & Johnson are two leading producers of health care products. Each has considerable assets, and each expends considerable funds each year toward the development
Boeing and McDonnell Douglas were two leaders in the manufacture of aircraft. In 1996 Boeing announced intentions to acquire McDonnell Douglas and create one huge corporation. Competitors, primarily
As noted in the chapter, the accounting for goodwill differs in countries around the world. The following discussion of a change in goodwill accounting practices was taken from the notes to the
Purpose: Use an annual report to identify a company’s plant assets and the depreciation method used.Address: http:/Awww.reportgallery.com (or go to www.wiley.com/college/kimmel)Steps:From Report
Tammy Company and Hamline Company are two companies that are similar in many respects except that Tammy Company uses the straight-line method and Hamline Company uses the declining-balance method at
The chapter presented some concerns regarding the current accounting standards for research and development expenditures.Instructions Pretend that you are either (a) the president of a company that
Olga Inc. is considering these two alternatives to finance its construction of a new $2 million plant:(a) Issuance of 200,000 shares of common stock at the market price of $10 per share.(b) Issuance
Keystone Corporation issued 1,000 9%, 5-year, $1,000 bonds dated January 1, 2001, at 100.(a) Prepare the journal entry to record the sale of these bonds on January 1, 2001.(b) Prepare the journal
The balance sheet for Hathaway Company reports the following information on July 1, 2001:Hathaway decides to redeem these bonds at 102 after paying semiannual interest. Prepare the journal entry to
Dominic Company issues $2 million, 10-year, 9% bonds at 98, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond discount.(a) Prepare the journal entry to
Hercules Inc. issues $5 million, 5-year, 10% bonds at 103, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond premium.(a) Prepare the journal entry to
Presented here are long-term liability items for Warner Company at December 31, 2001. Prepare the long-term liabilities section of the balance sheet for Warner Company. Bonds payable, due 2005 Notes
The 1998 Reebok financial statements contain the following selected data (in millions):Compute these values:(a) Working capital.(b) Current ratio.(c) Acid-test ratio.(d) Debt to total assets
At December 31, 1998, Southwest Airlines reported $3,006,092,000 in required payments on operating leases. If these assets had been purchased with debt, assets and liabilities would rise by
Presented below is the partial bond discount amortization schedule for Closet Corp., which uses the effective-interest method of amortization.Instructions (a) Prepare the journal entry to record the
Jim Eakins and Tom Zedek borrowed $15,000 on an 8-month, 8% note from Garden State Bank to open their business, EZ’s Coffee House. The money was borrowed on May 1, 2001.Instructions(a) Prepare the
On May 15, Maranga’s Outback Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 7%. At the time the note was due,
In providing accounting services to small businesses, you encounter the following situations pertaining to cash sales:1. Chan Company rings up sales and sales taxes separately on its cash register.
During the month of March, WaterBabies Company's employees earned wages of $70,000. Withholdings related to these wages were $4,500 for Social Security (FICA),$7,500 for federal income tax, $2,200
The Bundoora Desert Cats’ season tickets are priced at $230 and include 23 games. Revenue is recognized after each game is played. When the season began, the amount credited to Unearned Season
Flypaper Airlines is considering these two alternatives for financing the purchase of a fleet of airplanes:1. Issue 60,000 shares of common stock at $45 per share. (Cash dividends have not been paid
On January 1 Montana Company issued $100,000, 10%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Interest is not accrued on June 30.Instructions Prepare
Whitewater Company issued $300,000, 9%, 20-year bonds on January 1, 2001, at 103. Interest is payable semiannually on July 1 and January 1. Whitewater uses straightline amortization for bond premium
Teacher Company issued $220,000, 11%, 10-year bonds on December 31, 2000, for $210,000. Interest is payable semiannually on June 30 and December 31. Teacher uses the straight-line method to amortize
The situations presented here are independent.Instructions For each situation prepare the appropriate journal entry for the redemption of the bonds.(a) Price Corporation retired $130,000 face value,
The adjusted trial balance for Montreal Corporation at the end of the current year contained these accounts:Instructions (a) Prepare the long-term liabilities section of the balance sheet.(b)
McDonald’s 1998 financial statements contain the following selected data (in millions):Instructions (a) Compute these values:(1) Working capital.(2) Current ratio.(3) Acid-test ratio.(b) The notes
The following financial data were reported by Minnesota Mining and Manufacturing (3M) for 1998 and 1997 ($ in millions):Instructions (a) Calculate the current and acid-test ratios for 3M for 1998 and
Quebec Corporation issued $260,000, 9%, 10-year bonds on January 1, 2001, for $243,799. This price resulted in an effective interest rate of 10% on the bonds. Interest is payable semiannually on July
Detroit Company issued $180,000, 11%, 10-year bonds on January 1, 2001, for$191,216. This price resulted in an effective interest rate of 10% on the bonds. Interest is payable semiannually on July 1
Peyton Co. receives $110,000 when it issues a $110,000, 10%, mortgage note payable to finance the construction of a building at December 31, 2001. The terms provide for semiannual installment
On January 1, 2001, the ledger of Malaga Company contained these liability accounts:During January the following selected transactions occurred:Jan. 1 Borrowed $15,000 in cash from Midland Bank on a
Cling-on Company sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2001, Cling-on had the following transactions related to
The following section is taken from Jamaica Corp.'s balance sheet at December Sez 00:Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date.
Durango Corporation sold $1,500,000, 8%, 10-year bonds on January 1, 2001. The bonds were dated January 1, 2001, and pay interest on July 1 and January 1. Du- rango Corporation uses the straight-line
J. Downey Co. sold $5,000,000, 9%, 5-year bonds on January 1, 2001. The bonds were dated January 1, 2001, and pay interest on July 1 and January 1. The company uses straight-line amortization on bond
Thompson Company sold $4,000,000, 9%, 20-year bonds on January 1, 2001.The bonds were dated January 1, 2001, and pay interest on June 30 and December 31.The bonds were sold at 96. Assume no interest
On July 1, 2001, Global Satellites Corporation issued $1,200,000 face value, 9%, 10-year bonds at $1,125,227. This price resulted in an effective-interest rate of 10% on the bonds. Global uses the
On July 1, 2001, Amoco Imperial Company issued $2,000,000 face value, 12%, 10-year bonds at $2,249,245. This price resulted in a 10% effective-interest rate on the bonds. Amoco Imperial uses the
Atwater Corporation is building a new, state-of-the-art production and assemsuance of bonds and interest; bly facility for $10,000,000. To finance the facility it is using $2,000,000 it received from
On January 1, 2001, the ledger of Burlington Company contained these liabilentries, adjusting entries, and ity accounts:During January the following selected transactions occurred:Jan. 5 Sold
MileHi Mountain Bikes markets mountain-bike tours to clients vacationing in transactions; show balance various locations in the mountains of Colorado. In preparation for the upcoming sum- (eg S ee
The following section is taken from Sandy Oil Company's balance sheet at December 31, 2001:Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest
Pompeii Company sold $1,500,000, 12%, 10-year bonds on July 1, 2001. The bonds were dated July 1, 2001, and pay interest on July 1 and January 1. Pompeii Company uses the straight-line method to
Chula Vista Corporation sold $3,500,000, 7%, 20-year bonds on June 30, 2001.The bonds were dated June 30, 2001, and pay interest on June 30 and December 31. The company uses straight-line
On July 1, 2001, Cleopatra Corporation issued $1,500,000 face value, 12%, 10-year bonds at $1,686,934. This price resulted in an effective-interest rate of 10% on the bonds. Cleopatra uses the
On July 1, 2001, Waubonsee Company issued $2,200,000 face value, 10%, 10-year bonds at $1,947,661. This price resulted in an effective-interest rate of 12% on the bonds. Waubonsee uses the
Myron Corporation is building a new, state-of-the-art production and assembly facility for $15,000,000. To finance the facility it is using $3,000,000 it received from the issuance of shares of
Carlsbad Electric sold $3,000,000, 10%, 20-year bonds on January 1, 2001. The bonds were dated January 1 and pay interest on July 1 and January 1. The bonds were sold at 102. Assume no interest is
Refer to the financial statements of Tootsie Roll Industries and the Notes to Consolidated Financial Statements in Appendix A.Instructions Answer the following questions about current and contingent
The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A.Instructions(a) Based on the information contained
The September 1999 edition of Jnc. magazine contains an article by Jill Andresky Fraser entitled “Money Talk: Communicating with Your Banker Is Never Easy. But There Is a Smart Way to Do
Hechinger Co. and Home Depot are two home improvement retailers. Compared to Hechinger, which was founded in the early 1900s, Home Depot is a relative newcomer. But, in recent years, while Home Depot
Many multinational companies find it beneficial to have their shares listed on stock exchanges in foreign countries. In order to do this, they must comply with the securities laws of those countries.
Purpose: Bond or debt securities pay a stated rate of interest. This rate of interest is dependent on the risk associated with the investment. Moody's Investment Service provides ratings for
Purpose: To illustrate the time value of money. If you want to see how long it will take to reach your financial goals, try using “Investing for Kids Java Goals Calculator.” (Don’t be put off
On January 1, 1999, Jerry Mall Corporation issued $1,200,000 of 5-year, 8%bonds at 97; the bonds pay interest semiannually on July 1 and January 1. By January 1, 2001, the market rate of interest for
Finn Berge, president of the Blue Marlin, is considering the issuance of bonds to finance an expansion of his business. He has asked you to (1) discuss the advantages of bonds over common stock
The July 1998 issue of Inc. magazine includes an article by Jeffrey L. Seglin entitled “Would You Lie to Save Your Company?” It recounts the following true situation:A Chief Executive Officer
At December 31, 2001, Muzzillo Imports reported this information on its balance sheet:Instructions (a) Prepare the journal entries to record each of these five transactions. Assume that no cash
This is an aging schedule for Cain Company:At December 31, 2001, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $10,000.Instructions (a) Journalize and post the adjusting
Here is information related to Tisinai Company for 2001:Instructions (a) What amount of bad debts expense will Tisinai Company report if it uses the direct write-off method of accounting for bad
At December 31, 2001, the trial balance of John Gleason Company contained the following amounts before adjustment:Instructions (a) Prepare the adjusting entry at December 31, 2001, to record bad debt
On January 1, 2001, Elam Company had Accounts Receivable $54,200 and Allowance for Doubtful Accounts $4,700. Elam Company prepares financial statements annually. During the year the following
Kolzow Company closes its books on July 31. On June 30 the Interest Receivable balance is $132.80, and the Notes Receivable account balance is $20,800. Notes Receivable include the following:During
Presented here is basic financial information (in millions) from the 1998 annual reports of Nike and Reebok:Instructions (a) Calculate the receivables turnover ratio and average collection period for
At December 31, 2001, Cellular Ten Inc. reported this information on its balance sheet:Instructions (a) Prepare the journal entries to record each of these five transactions. Assume that no cash
Presented here is an aging schedule for Case Western Company:At December 31, 2001, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $12,000.Instructions (a) Journalize and
Here is information related to Hohenberger Company for 2001:Instructions (a) What amount of bad debts expense will Hohenberger Company report if it uses the direct write-off method of accounting for
At December 31, 2001, the trial balance of Lexington Company contained the following amounts before adjustment:Instructions (a) Based on the information given, which method of accounting for bad
On January 1, 2001, Diego Company had Accounts Receivable $146,000; Notes Receivable $15,000; and Allowance for Doubtful Accounts $13,200. The note receivable is from Annabelle Company. It is a
Zimpher Company closes its books on October 31. On September 30 the balance in Interest Receivable is $182.40, and the Notes Receivable account balance is $23,400.Notes Receivable include the
Presented here is basic financial information from the 1998 annual reports of Intel and Advanced Micro Devices (AMD), the two primary manufacturers of silicon chips for personal
Refer to the financial statements of Tootsie Roll Industries and the accompanying notes to its financial statements in Appendix A.Instructions(a) Calculate the receivables turnover ratio and average
The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.Instructions(a) Based on the information contained in these
The March 31, 1999, issue of The Wall Street Journal includes an article by Mark ©Maremont entitled “Store Markdowns: Leaning on Suppliers, Rite Aid Deducts Cash at Bill-Paying Time.” The
Sears is one of the world’s largest retailers. It is also a huge provider of credit through its Sears credit card. Revenue generated from credit operations was $4.6 billion in 1998 from 30 million
Art World Industries, Inc., was incorporated in 1986 in Delaware, although it is located in Los Angeles. The company prints, publishes, and sells limited-edition graphics and reproductive prints in
Purpose: The Security Exchange Act of 1934 requires any firm that is listed on one of the national exchanges to file annual reports (form 10-K), financial statements, and quarterly reports (form
Johanna and Jake Berkvom own Campus Fashions. From its inception Cam- pus Fashions has sold merchandise on either a cash or credit basis, but no credit cards have been accepted. During the past
Sara Joy Corporation is a recently formed business selling the “World’s Best Doormat.” The corporation is selling doormats faster than Sara Joy can make them. It has been selling the product on
The controller of Shirt Corporation believes that the company’s yearly allowance for doubtful accounts should be 2% of net credit sales. The president of Shirt Corporation, nervous that the
Describe how the cost principle applies to plant assets.
Explain the concept of depreciation.
Compute periodic depreciation using the Straight-line method, and contrast its expense pattern with those of other methods.
Describe methods for evaluating the use of depreciation.
Identify the basic issues related to reporting intangible assets.
Describe the procedure for revising periodic
Indicate how long-lived assets are reported on the balance sheet.
Explain how to account for the disposal of plant assets. plant assets.
Shirley Basler Company incurs these expenditures in purchasing a truck: cash price $18,000; accident insurance (during use) $2,000; sales taxes $900; motor vehicle license $300; and painting and
Joy Cunningham Company acquires a delivery truck at a cost of $22,000 on January 1, 2001. The truck is expected to have a salvage value of $2,000 at the end of its 6-year useful life. Compute annual
On January 1, 2001, the Asler Company ledger shows Equipment $32,000 and Accumulated Depreciation $12,000. The depreciation resulted from using the straightline method with a useful life of 10 years
Wiley Company sells office equipment on September 30, 2001, for $21,000 cash.The office equipment originally cost $72,000 and as of January 1, 2001, had accumulated depreciation of $42,000.
Popper Company purchases a patent for $180,000 on January 2, 2001. Its estimated useful life is 10 years.(a) Prepare the journal entry to record patent expense for the first year.(b) Show how this

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