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fundamentals financial accounting
Questions and Answers of
Fundamentals Financial Accounting
Amortizing the discount on bonds payable does which of the following?a. Increases the recorded amount of interest expenseb. Is necessary 'only if the bonds were issued at more than face valuec.
The journal entry on the maturity date to record the payment of \(\$ 1,000,000\) of bonds payable that were issued at a \(\$ 70,000\) discount includesa. a debit to Discount on Bonds Payable for \(\$
The payment of the face amount of a bond on its maturity date is regarded as which of the following?a. An operating activityb. An investing activityc. A financing activity
Encore Records has two employees who are paid on the 1st and 15th of each month for the work they performed in the preceding half-month. At February 28, each employee is owed gross pay of \(\$
Refer to the data in exercise 7-1. Show what Encore would report on its balance sheet at February 28, and on its income statement for the month ended on that date.Exercise 7-1Encore Records has two
Refer to the data given in exercise 57-3. What amount of warranty expense will Forbes report during 2020? Does the warranty expense for the year equal the year's cash payments for warranties? Explain
Wardlow Sales, Inc.'s comparative income statements and balance sheets show the following selected information for 2019 and 2020:{Requirements}1. Calculate the company's accounts payable turnover and
Compute the price of the following bonds:a. \(\$ 1,000,000\) quoted at 89.75b. \(\$ 500,000\) quoted at 110.375c. \(\$ 100,000\) quoted at 97.50d. \(\$ 400,000\) quoted at 102.625
Suppose Scotiabank issued a six-year \(\$ 10,000\) bond with stated interest rate of \(6.25 \%\) when the market interest rate was \(61 / 4 \%\). Assume that the accounting year of Scotiabank ends on
Standard Autoparts Inc. issued \(\$ 100,000\) of \(7 \%, 10\)-year bonds at a price of 87 on January 31, 2020. The market interest rate at the date of issuance was \(9 \%\), and the standard bonds
Use the amortization table that you prepared for Standard Autoparts in exercise S7-9 to answer these questions about the company's long-term debt:1. How much cash did Standard Autoparts borrow on
Max Industries Ltd. borrowed money by issuing a \(\$ 10,000\) 6.5\%, 10-year bond. Assume the issue price was 94 on July \(1,2020\).1. How much cash did Max Industries receive when it issued the
Retuin to the Max Industries bond in exercise 57-11. Assume that Max Industries issued the bond on July 1, 2020, at a price of 90 . Also assume that Max Industries's accounting year ends on December
Evensen Plumbing Products Ltd. reported the following data in 2020 (in millions):Compute Evensen's leverage ratio, debt ratio, and times-interest-earned ratio, and write a sentence to explain what
Trinidad Industries Inc. has the following selected accounts at December 31, 2020)Prepare the liabilities section of Trinidad's balance sheet at December 31, 2020, to show how Trinidad would report
Omtario Traveller Magazine completed the following transactions during 2020:Journalize these transactions (explanations are not required). Then report any liability on the company's balance sheet at
At January 31, Penske Talent Search owes its employees gross salaries totalling \(\$ 20,000\) for work they performed in the last half of January. The income taxes to be withheld from these earnings
Joy's Bar and Grill completed the following note-payable transactions:Answer these questions for Joy's Bar and Grill:1. How much interest expense must be accrued at December 31, 2020?2. Determine the
Geodesic Domes, Inc., builds environmentally sensitive structures. The company's 2020 revenues totalled \(\$ 2,800\) million. At December 31,2020 , and 2019, the company had \$661 million and \(\$
Mills Geothermal Ltd. installs environmental heating/cooling systems. The company's 2020 revenues totalled \(\$ 360\) million, and at December 31,2020 , the company had \(\$ 65\) million in current
Assume that Premium Golf Equipment completed these selected transactions during December 2020:a. Sales of \(\$ 3,000,000\) are subject to estimated warranty cost of \(3 \%\). The estimated warranty
On January 31, 2020, Triumph Sports Cars issued 10 -year, \(6 \%\) bonds with a face value of \(\$ 100,000\). The bonds were issued at 97 and pay interest on January 31 and July 31 . Triumph
Moreau Manufacturing Inc. has \(\$ 200,000\) of \(8 \%\) debenture bonds outstanding. The bonds were issued at 102 in 2020 and mature in 2040.{Requirements}1. How much cash did Moreau receive when it
Family General Stores Inc. is authorized to issue \(\$ 500,000\) of \(7 \%, 10\)-year bonds. On Record bond transactions and calculate interest using the effective-interest method December 31,2020 ,
Un June 30, 2020, the market interest rate is 7\%. Dellaca Enterprises issues \(\$ 500,000\) of \(8 \%, 20\)-year bonds at 110.625 . The bonds pay interest on June 30 and December 31. Dellaca
Carlson Candies issued \(\$ 300,000\) of \(83 / 8 \%\), five-year bonds on January 1, 2020, when the market interest rate was \(91 / 2 \%\). The company pays interest annually at year-end. The issue
Green Earth Homes, Inc., builds environmentally sensitive structures. The company's 2020 revenues totalled \$2,785 million. At December 31, 2020 and 2019, the company had \(\$ 643\) million and \(\$
Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries Compare
Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries Compare
The top management of Marquis Manufacturing Services examines the following company accounting records at August 29, immediately before the end of the year, August 31:1. Suppose Marquis's management
The Cola Company reported the following comparative information at December 31 2020, and December 31, 2019 (amounts in millions and adapted):{Requirements}1. Calculate the following ratios for 2020
Mark IV Industries Inc. issued \(\$ 100\) million \(13 \%\) debentures due March 15,2025 , with interest payable March 15 and September 15; the price was 96.5.{Requirements}Answer these questions:1.
Nautical Marina needs to raise \(\$ 1.0\) million to expand the company. Nautical Marina is considering the issuance of either- \(\$ 1,000,000\) of \(8 \%\) bonds payable, or- 100,000 common shares
Sea Spray Marina experienced these events during 2020.a. December revenue totalled \(\$ 110,000\) and, in addition, Sea Spray collected sales tax of \(7 \%\). The sales tax amount will be remitted to
The following transactions of Smooth Sounds Music Company occurred during 2020 and 2021 :{Requirement}Record the transactions in Smooth Sounds's journal. Explanations are not required. 2020 Mar. 3
The board of directors of Circuits Plus authorizes the issue of \(\$ 9,000,000\) of \(8 \%\). 25 -year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on
On February 28, 2020, ETrade Inc. issues \(8 \frac{112}{2} \%, 20\)-year bonds with a face value of \(\$ 200,000\). The bonds pay interest on February 28 and August 31. ETrade amortizes bonds by the
1. Journalize the following transactions of Trekker Boot Company:2. At December 31, 2020, after all year-end adjustments, determine the carrying amount of Trekker's bonds payable, net.3. For the six
Notes to the Maritime Industries Ltd. financial statements reported the following data on December 31, 2020 (the end of the fiscal year):Maritime Industries amortizes bonds by the effective-interest
On December 31, 2020, Digital Connections issued 8\%, 10-year bonds payable with a maturity value of \(\$ 500,000\). The semi-annual interest dates are June 30 and December 31 The market interest
The accounting records of Brighton Foods, Inc., include the following items at December 31, 2020:{Requirements}1. Why is the interest-payable amount so much less than the amount of interest
The accounting records of Pacer Foods Inc. include the following items at December 31, 2020.{Requirements}1. Show how each relevant item would be reported on the Pacer Foods Inc. classified balance
The board of directors of Harmony Electronics authorizes the issue of \(\$ 8,000,000\) of \(10 \%, 25\)-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are
Goldwater Corporation experienced these five events during 2020a. December sales totalled \(\$ 50,000\), and Goldwater collected harmonized sales tax (HST) of \(13 \%\). The HST will be remitted to
Assume that the following transactions of Sleuth Book Store occurred during 2020 and 2021:{Requirement}Record the transactions in the company's journal. Explanations are not required. 2020 Jan. 9
Assume the board of directors of The Saddledome Foundation authorizes the issue of \(\$ 1\) million of \(8 \%, 20\)-year bonds. The semi-annual interest dates are March 31 and September 30. The bonds
On February 28, 2020, Panorama Ltd. issues 7\%, 10-year notes with a face value of \(\$ 300,000\). The notes pay interest on February 28 and August 31, and Panorama amortizes notes by the
1. Journalize the following transactions of Farm Equipment Limited:2. At December 31, 2020, after all year-end adjustments, determine the carrying amount of Farm Equipment Limited's bonds payable,
The notes to the Community Charities financial statements reported the following data on December 31, 2020 (end of the fiscal year):{Requirements}1. Answer the following questions about Community
Two businesses in very different circumstances are pondering how to raise \(\$ 2\) million.HighTech.com has fallen on hard times. Net income has been low for the last three years, even falling by
The accounting records of Braintree Foods, Inc., include the following items at December 31, 2020:{Requirements}1. Why is the interest-payable amount so much less than the amount of interest
The accounting records of Toronto Financial Services include the following items at December 31, 2020:{Requirements}1. Show how each relevant item would be reported on Toronto Financial Services's
The board of directors of Laptops Plus authorizes 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
Which of the following is a characteristic of a corporation?a. Mutual agencyb. No income taxc. Limited liability of shareholdersd. Both a and b
Team Spirit Inc. issues 240,000 common shares for \$ \(\$ 5\) per share. The journal entry is: a. Cash..... 240,000 Common Shares. 240,000 b. Cash...... 1,200,000 Common Shares. 240,000 Gain on the
Which of the following is true about stated value?a. It represents what a share is worth.b. It represents the original selling price for a share.c. It is established for a share after it is issued.d.
The contributed capital portion of shareholders' equity does not includea. preferred shares.b. contributed surplusc. retained earnings.d. common shares.
Preferred shares are least likely to have which of the following characteristics?a. Preference as to assets on liquidation of the corporationb. Extra liability for the preferred shareholdersc. The
Which of the following classifications represents the largest quantity of common shares?a. Issued sharesb. Outstanding sharesc. Unissued sharesd. Authorized shares
What is total share capital for Sportaid Inc.?a. \(\$ 682,000\)b. \(\$ 701,345\)c. \(\$ 694,445\)d. \(\$ 753,800\)e. None of the above These account balances at December 31 relate to Sportaid Inc.
What is total shareholders' equity for Sportaid Inc.?a. \(\$ 766,300\)b. \(\$ 758,800\)c. \(\$ 753,800\)d. \(\$ 764,735\)e. None of the above These account balances at December 31 relate to Sportaid
Sportaid's net income for the period is \(\$ 119,600\), and beginning common shareholders' equity is \(\$ 681,400\) and it declared the full amount of annual dividends on the preferred shares. What
If the average issue price of Sportaid's outstanding common shares is \(\$ 11.86\), how many common shares are issued and outstanding?a. 50,000b. 100,000c. 593,000d. Unknown These account balances at
If Sportaid's board of directors decided to declare a december 31, what is the largest dividend it could declare?a. \(\$ 753,800\)b. \(\$ 71,800\)c. \(\$ 8,900\)d. \(\$ 593,000\)These account
If the board of directors declares a dividend of \(\$ 20,000\)on December 31, how much of this total would the common shareholders receive? No other dividends have been declared during the year.a.
Shareholders are eligible for a dividend if they own the shares on the date ofa. declaration.b. record.c. payment.d. issuance.
Mario's Foods has outstanding \(500 \$ 7.00\) preferred shares and 1,200 common shares. Mario's declares dividends of \(\$ 14,300\). The correct entry is: a. Retained Earnings.. 14,300 Dividends
A corporation has \(20,000 \$ 8.00\) preferred shares outstanding with a stated value of \(\$ 2,000,000\). Also, there are 20,000 common shares outstanding. If a \(\$ 350,000\) dividend is paid, how
Assume the same facts as in question 15 . What is the amount of dividends per share on common shares?a. \(\$ 9.50\)b. \(\$ 8.00\)c. \(\$ 17.50\)d. \(\$ 1.50\)e. None of the above
Which of the following is not true about a \(10 \%\) stock dividend?a. Shareholders do not receive additional shares.b. No assets are affected.c. Retained Earnings decreases.d. The market price of
A company declares a \(5 \%\) stock dividend. The debit to Retained Earnings is an amount equal to thea. stated value of original shares.b. excess of the market price over the original issue price of
Which of the following statements is not true about a 3 -for-1 stock split?a. Stated value is reduced to one-third of what it was before the split.b. Total shareholders' equity increases.c. The
Franco Company's net income and preferred dividends are \(\$ 44,000\) and \(\$ 4,000\), respectively, and average total common shareholders' equity is \(\$ 384,000\). How much is Franco's return on
Riverside Corporation began 2020 owing noles payable of \(\$ 3.5\) million. During 2020. Riverside borrowed \(\$ 1.7\) million on notes payable and paid off \(\$ 1.6\) million of notes payable from
During 2020, Valley Sales Inc. earned revenues of \(\$ 500,000\) on account. Valley Sales collected \(\$ 410,000\) from customers during the year. Expenses totalled \(\$ 420,000\), and the related
Marquis Inc. made sales of \(\$ 700\) million during 2020. Of this amount, Marquis Inc. collected cash for all but \(\$ 30\) million. The company's cost of goods sold was \(\$ 300\) million, and all
Great Sporting Goods Inc. began 2020 owing notes payable of \(\$ 4.0\) million. During 2020 , the company borrowed \(\$ 2.6\) million on notes payable and paid off \(\$ 2.5\) million of notes payable
Ford Canada sells large fleets of vehicles to auto rental companies, such as Budget and Avis. Suppose Budget is negotiating a contract with Ford to purchase 1,000 Explorers by the end of next year.
Answer the following questions about prepaid expenses:a. On November 1, World Travel Ltd. prepaid \(\$ 6,000\) for three months' rent. Give the adjusting entry to record rent expense at December 31.
During 2020, Many Miles Trucking paid salary expense of \(\$ 40\) million. At December 31, Many Miles accrued salary expense of \(\$ 2\) million. Many Miles paid \(\$ 1.9\) million to its employees
Return to the situation in exercise 3-7. Here you are accounting for the same transactions on the books of Scotiabank, which lent the money to Schwartz \& Associates Inc. Perform all three steps in
Write a paragraph explaining why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: Maclean's magazine collects cash from subscribers in
Josie Inc. collects cash from customers two ways:1. Accrued Revenue. Some customers pay Josie after Josie has performed service for the customer. During 2020, Josie made sales of \(\$ 50,000\) on
Entertainment Centre Ltd. reported the following data at March 31, 2020, with amounts adapted and in thousands:You are the CFO responsible for reporting Entertainment Centre Ltd. (ECL) results. Use
Use the Entertainment Centre Ltd. data in exercise 3-12 to make the company's closing entries at March 31, 2020. Then set up a T-account for Retained Earnings and post to that account. Compare
Use the Entertainment Centre Ltd. data in exercise 3-12 to answer the following questions.1. Was the net revenue high enough to cover all of ECL's costs?2. What could you do to improve this
Use the Entertainment Centre Ltd. data in exercise 3-12 to compute ECL'sa. Current ratiob. Debt ratio Round to two decimal places. Report to the CEO whether these values look strong, weak, or
During 2020, Organic Foods Inc. made sales of \(\$ 4,000\) (assume all on account) and collected cash of \(\$ 4,100\) from customers. Operating expenses totalled \(\$ 800\), all paid in cash. At
During 2020, Dish Networks Inc. earned revenues of \(\$ 700\) million. Expenses totalled \(\$ 540\) million. Dish collected all but \(\$ 20\) million of the revenues and paid \(\$ 530\) million on
On December 1, 2019, Neu Consulting Ltd. signed a contract with Kraftwerk Inc., which obligated Neu to provide Kraftwerk with 10 hours of consulting services per month from January through December
An accountant made the following adjustments at December 31, the end of the accounting period:a. Prepaid insurance, beginning, \(\$ 700\). Payments for insurance during the period, \(\$ 2,100\).
The adjusted trial balance of Honeybee Hams Inc. follows.{Requirement}Prepare Honeybee Hams's income statement and statement of retained earnings for the year ended December 31, 2020, and its balance
Clark Moters Lid. faced the following situations. Journalize the adjusting entry needed at year-end (December 31, 2020) for each situation. Consider each fact separately.a. The business paid interest
The adjusted trial balances of Tower Development Inc. for March 31, 2019, and March 31, 2020, include these amounts (in millions):Compute the amount of sales revenue, insurance expense, and other
This question deals with the items and the amounts that two entities, Mountain Services Inc. (Mountain) and City of Squamish (Squamish), should report in their financial statements.1. On March 31,
Prepare the required closing entries for the following selected accounts from the records of SouthWest Transport Inc. at December 31, 2020 (amounts in thousands):December 31, 2020? Prepare a
You have just signed a contract with Rogers Wireless that provides you with a new iPhone and two years of wireless phone and data service. The terms of the contract specify that the price of the
The unadjusted trial balance and the income statement amounts from the December 31, 2020, adjusted trial balance of Yosaf Portraits Ltd. are given below.{Requirement}Journalize the adjusting and
Le Gasse Inc. reported this information at December 31:{Requirements}1. Using this information, calculate the current ratio and the debt ratio for 2020, 2019, and 2018.2. Explain whether each ratio
The accounts of Maritime Specialists Ltd. prior to the year-end adjustments are given belowAdjusting data at the end of the year include:a. Unearned sales revenue that has been earned, \(\$ 1,000\)b.
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