Questions and Answers of Survey of Accounting

Fredrick Corporation reported the following operating results for two consecutive years.Required:a. Compute the percentage changes in Fredrick Corporation’s income statement components between the
Sanchez Company reported the following operating results for two consecutive years.Required:Express each income statement component for each of the two years as a percent of sales. 2004 Amount
Balance sheet data for Embry Corporation follow.Required:Compute the following: Current Assets Long-Term Assets (net) Total Assets Current Liabilities Long-Term Liabilities Total Liabilities Common
For 2006, Ethridge Corporation reported after-tax net income of $$3,600,000$. During the year, the number of shares of stock outstanding remained constant at 10,000 of $$100$ par, 9 percent
Income statements for Shirley Company for 2005 and 2006 follow.Required:a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2005 and 2006.b.
Compute the specified ratios using Kale Company’s balance sheet at December 31, 2004.The average number of common stock shares outstanding during 2004 was 880 shares. Net income for the year was
Selected data from Walker Company follow.Selected data from Walker Company follow.Required:Compute the following:a. The accounts receivable turnover for 2004.b. The inventory turnover for 2004.c. The
The December 31, 2005, balance sheet for Ivey Inc. is presented here. These are the only accounts on Ivey’s balance sheet. Amounts indicated by question marks (?) can be calculated using the
The following percentages apply to Walden Company for 2005 and 2006.Required:Assuming that sales were $$600,000$ in 2005 and $$800,000$ in 2006, prepare income statements for the two years. 2006
Oxmoore Company’s income statement information follows. 2004 2003 Net Sales $420,000 $260,000 Income before Interest and Taxes 110,000 85,000 Net Income after Taxes 55,500 63,000 Interest Expense
Bellaire Manufacturing has a current ratio of 3:1 on December 31, 2003. Indicate whether each of the following transactions would increase (+), decrease (—), or not affect (NA) Bellaire’s current
Selected data for Faulkner Company for 2005 and additional information on industry averages follow.Required:a. Calculate and compare Faulkner Company’s ratios with the industry averages.b. Discuss
The bookkeeper for Clifford’s Country Music Bar went insane and left this incomplete balance sheet. Clifford’s working capital is $$90,000$ and its debt to assets ratio is 40
The following financial statements apply to Maronge Company.Required:Calculate the following ratios for 2004 and 2005. When data limitations prohibit computing averages, use year-end balances in your
Financial statements for Pocca Company follow.Required:Prepare a horizontal analysis of both the balance sheet and income statement. 2006 2005 Assets Current Assets Cash Marketable Securities
Use the financial statements for Pocca Company from Problem 9-22 to calculate the following ratios for 2006 and 2005.a. Working capitalb. Current ratioc. Quick ratiod. Accounts receivable turnover
Use the financial statements for Pocca Company from Problem 9-22 to perform a vertical analysis of both the balance sheets and income statements for 2006 and 2005.Data From Problem 9-22:-Financial
The following information relates to Best Buy and Circuit City Stores, Inc., for their 2003 and 2002 fiscal years.Required:a. Compute the following ratios for the companies’ 2003 fiscal years:(1)
Presented here are selected data from the 10-K reports of four companies for the 1997 fiscal year. The four companies, in alphabetical order, are 1. BellSouth Corporation, a telephone company that
Dell, Inc., uses its SEC Form 10-K as its official annual report. The company also produces a “Year in Review” summary, which it refers to as an annual report, but that document does not provide
Following are the debt to assets, return on assets, and return on equity ratios for four companies from two different industries. The range of interest rates each company was paying on its long-term
J. Talbot is the accounting manager for Kolia Waste Disposal Corporation. Kolia is having its worst financial year since its inception. The company is expected to report a net loss. In the midst of
Tuscan Manufacturing Company makes a unique headset for use with mobile phones. During 2006, its first year of operations, Tuscan experienced the following accounting events. Other than the adjusting
Use the Topps Company’s annual report to answer the following questions.a. Does Topps’ common stock have a par value, and if so how much is it?b. How many shares of Topps’ common stock were
Listed here are the stockholders’ equity sections of three public companies for years ending in 2003 and 2002:Required:a. Divide the class in three sections and divide each section into groups of
Listed here are data for five companies. These data are from companies’ annual reports for the fiscal year indicated in the parentheses. The market price per share is the closing price of the
This problem requires stock price quotations for the New York Stock Exchange, the American Stock Exchange, and NASDAQ. These are available in The Wall Street Journal and in the business sections of
During 2007, Musicland Corporation and Jazz town Corporation reported net incomes of $$62,000$ and $$54,000$ , respectively. Each company had 10,000 shares ofcommon stock issued and outstanding.
Financial statements for Stallings Company follow.Required:a. Use horizontal analysis to determine which expense item increased by the highest percentage from 2008 to 2009.b. Use vertical analysis to
A sole proprietorship was started on January 1, 2005, when it received $$60,000$ cash from Mark Pruitt, the owner. During 2005, the company earned $$40,000$ in cash revenues and paid $$19,300$
Justin Harris and Paul Berryhill started the HB partnership on January 1,2006. The business acquired $$56,000$ cash from Harris and $$84,000$ from Berryhill. During 2006, the partnership earned
Newly formed Home Medical Corporation has 100,000 shares of $$5$ par common stock authorized. On March 1,2006, Home Medical issued 10,000 shares of the stock for $$12$ per share. On May 2 the
Rainey Inc. was organized on June 5, 2007. It was authorized to issue 400,000 shares of $$10$ par common stock and 50,000 shares of 4 percent cumulative class A preferred stock. The class A stock
The following information pertains to Smoot Corp. at January 1, 2006.Smoot Corp. completed the following transactions during 2006:1. Issued 1,000 shares of $$10$ par common stock for $$28$ per
On October 1,2005, Smart Corporation declared a $$60,000$ cash dividend to be paid on December 30 to shareholders of record on November 20.Required:Record the events occurring on October 1,
When Polledo Corporation was organized in January 2007, it immediately issued 5,000 shares of $$50$ par, 5 percent, cumulative preferred stock and 10,000 shares of $$10$ par common stock. The
B&S Corporation had the following stock issued and outstanding at January 1, 2007:1. 100,000 shares of $$5$ par common stock.2. 5,000 shares of $$100$ par, 5 percent, noncumulative preferred
Wu Corp. had the following stock issued and outstanding at January 1, 2006:1. 50,000 shares of no-par common stock.2. 10,000 shares of $$100$ par, 4 percent, cumulative preferred stock. (Dividends
Merino Corporation issued a 4 percent stock dividend on 30,000 shares of its $$10$ par common stock.At the time of the dividend, the market value of the stock was $$25$ per share.Required:a.
Mighty Drugs (one of the three largest drug makers) just reported that its 2004 third quarter profits are essentially the same as the 2003 third quarter profits. In addition to this announcement, the
Merck & Company is one of the world’s largest pharmaceutical companies. The following data were taken from the company’s 2004 annual report.Required:a. Compute Merck’s price-earnings ratio
Ja-San Company was started on January 1,2007, when the owners invested $$160,000$ cash in the business. During 2007, the company earned cash revenues of $$90,000$ and incurred cash expenses of
Lane Corporation was authorized to issue 100,000 shares of $$5$ par common stock and 20,000 shares of $$100$ par, 6 percent, cumulative preferred stock. Lane Corporation completed the following
Midwest Corp. completed the following transactions in 2007, the first year of operation:1. Issued 20,000 shares of $$10$ par common stock at par.2. Issued 2,000 shares of $$30$ stated value
Boley Corporation reports the following information in its January 1, 2006, balance sheet:During 2006, Boley was affected by the following accounting events:1. Purchased 1,000 shares of treasury
Chen Corp. completed the following transactions in 2007, the first year of operation:1. Issued 20,000 shares of $$20$ par common stock for $$30$ per share.2. Issued 5,000 shares of $$50$ par, 5
The stockholders’ equity section of the balance sheet for Atkins Company at December 31, 2007, is as follows;Required:a. What is the par value per share of the preferred stock?b. What is the
Shawn Bates was working to establish a business enterprise with four of his wealthy friends. Each of the five individuals would receive a 20 percent ownership interest in the company. A primary goal
Google, Inc., operates the world’s largest Internet search engine, international Business Machines Corporation (IBM) is one of the world’s largest computer hardware and software companies. The
Edwards Inc. experienced the following events:1. Issued common stock for cash.2. Declared a cash dividend.3. Issued noncumulative preferred stock for cash.4. Appropriated retained earnings.5.
Use the Topps Company’s annual report to answer the following questions.a. What was Topps’ current ratio as of March 1, 2003, and March 2, 2002?b. Did the current ratio get stronger or weaker
The following accounting information pertains to Eckert and Ragland companies at the end of 2006:Required:a. Organize the class into two sections and divide each section into groups of three to five
In the liabilities section of its 2002 balance sheet, Wachovia Corporation reported “noninterest- bearing deposits” of over $$44$ billion . Wachovia is a very large banking company. In the
Required:a. Compute the current ratio for each company.b. Which company has the greater likelihood of being able to pay its bills?c. Assuming that both companies have the same amount of total assets,
Putting “yum” on people’s faces around the world is the mission of YUM Brands, Inc. Yum was spun off from PepsiCo in 1997. A spin-off occurs when a company separates its operations into two or
Perfect Picture Inc. (PPI) experienced the following transactions during 2007. The transactions are summarized (transaction data pertain to the full year) and limited to those that affect the
Assume that on October 1, 2007, Big Company borrowed $$10,000$ from the local bank at 6 percent interest. The note is due on October 1, 2008. How much interest does Big pay in 2007? How much
Classic Corporation borrowed $$90,000$ from the bank on November 1, 2007. The note had an 8 percent annual rate of interest and matured on April 30, 2008. Interest and principal were paid in cash
Scott Perkins started Perkins Company on January 1, 2005. The company experienced the following events during its first year of operation.1. Earned $$1,500$ of cash revenue for performing
The University Book Store sells books and other supplies to students in a state where the sales tax rate is 7 percent. The University Book Store engaged in the following transactions for 2008. Sales
The following selected transactions apply to Big Stop for November and December 2008. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the
The following legal situations apply to Stringer Corp. for 2009:1. A customer slipped and fell on a slick floor while shopping in the retail store. The customer has filed a $$5$ million lawsuit
To support herself while attending school, Ellen Abba sold computers to other students. During her first year of operation, she sold computers that had cost her $$120,000$ cash for $$260,000$
The Ja-San Appliance Co. provides a 120-day parts-and-labor warranty on all merchandise it sells. Ja- San estimates the warranty expense for the current period to be $$1,250$ . During the period a
The following transactions apply to Mabry Equipment Sales Corp. for 2007:1. The business was started when Mabry Corp. received $$50,000$ from the issue of common stock.2. Purchased $$175,000$ of
Marshall Co. is planning to finance an expansion of its operations by borrowing $$50,000$ . City Bank has agreed to loan Marshall the funds. Marshall has two repayment options: (1) to issue a note
On January 1, 2007, Mooney Co. borrowed $$60,000$ cash from First Bank by issuing a four-year, 6 percent note. The principal and interest are to be paid by making annual payments in the amount of
Jim Felix started a business by issuing an $$80,000$ face value note to State National Bank on January 1, 2008. The note had a 7 percent annual rate of interest and a 10-year term. Payments of
A partial amortization schedule for a five-year note payable that Chacon Co. issued on January 1, 2008, is shown here:Required:a. What rate of interest is Chacon Co. paying on the note?b. Using a
King Co. uses an approved line of credit not to exceed $$200,000$ with the local bank to provide short-term financing for its business operations. King either borrows or repays funds on the first
Wyatt Company issued $$400,000$ of 20-year, 6 percent bonds on January 1, 2007. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Wyatt immediately in¬
Use the following information to prepare a classified balance sheet for Steller Co. at the end of 2008. Accounts Receivable $42,500 Accounts Payable 8,000 Cash 15,260 Common Stock 42,000 Long-Term
Tupperware Company claims to be “one of the world’s leading direct sellers, supplying premium food storage, preparation and serving items to consumers in more than 100 countries through its
The following transactions apply to Artesia Co. for 2009, its first year of operations.1. Received $$40,000$ cash from the issue of a short-term note with a 5 percent interest rate and a one- year
Norman Co. borrowed $$15,000$ from the local bank on April 1, 2008, when the company was started.The note had an 8 percent annual interest rate and a one-year term to maturity. Norman Co.
The following selected transactions were taken from the books of Caledonia Company for 2008.1. On March 1, 2008, borrowed $$50,000$ cash from the local bank. The note had a 6 percent interest rate
Use the following information to prepare a multistep income statement and a classified balance sheet for Douglas Company for 2004. Operating Expenses $ 90,000 Cash $ 23,000 Land 50,000 Interest
On January 1, 2006, Miller Co. borrowed cash from First City Bank by issuing a $$60,000$ face value, three-year installment note that had a 7 percent annual interest rate. The note is to be repaid
The following transactions apply to Marque Co. for 2008, its first year of operations.1. Received $$30,000$ cash in exchange for issuance of common stock.2. Secured a $$100,000,$ 10-year
Quality Sports Equipment uses a line of credit to help finance its inventory purchases. Quality sells ski equipment and uses the line of credit to build inventory for its peak sales months, which
Shim Company has a line of credit with Bay Bank. Shim can borrow up to $$200,000$ at any time over the course of the 2006 calendar year. The following table shows the prime rate expressed as an
Texas Instruments, Inc., claims to be “the world leader in digital signal processing and analog technologies, the semiconductor engines of the Internet age.” Eastman Kodak Company manufactures
Use the Topps Company’s annual report to answer the following questions.a. What method of depreciation does Topps use?b. What types of intangible assets does Topps have?c. What are the estimated
Sweet’s Bakery makes cakes, pies, and other pastries that it sells to local grocery stores. The company experienced the following transactions during 2008.1. Started business by acquiring
The following ratios are for four companies in different industries. Some of these ratios have been discussed in the textbook; others have not, but their names explain how the ratio was computed. The
Organic Bagel Bakery (OBB) was started on January 1, 2005, when it acquired $$100,000$ cash from the issue of common stock. The company immediately purchased an oven that cost $$100,000$ cash.
Qin Company and Roche Company experienced the exact same set of economic events during 2006. Both companies purchased machines on January 1, 2006. Except for the effects of this purchase, the
Give some examples of long-term operational assets that each of the following companies is likely to own: (a) AT&T, (b) Caterpillar, (c) Amtrak, and (d) The Walt Disney Co.
Which of the following items should be classified as long-term operational assets? a. Cash b. Buildings c. Production machinery d. Accounts receivable e. Prepaid rent f. Franchise g. Inventory h.
Identify each of the following long-term operational assets as either tangible (T) or intangible (I). a. Retail store building b. Shelving for inventory c. Trademark d. Gas well e. Drilling rig f.
The following events apply to The Pizza Factory for the 2008 fiscal year:1. The company started when it acquired $$18,000$ cash from the issue of common stock.2. Purchased a new pizza oven that
Smith Company started operations by acquiring $$100,000$ cash from the issue of common stock. On January 1, 2005, the company purchased equipment that cost $$100,000$ cash. The equipment had an
CJ’s Pizza purchased a delivery van on January 1, 2005, for $$25,000$ . In addition, CJ’s paid sales tax and title fees of $$1,000$ for the van. The van is expected to have a four-year life
At the beginning of 2006, Precision Manufacturing purchased a new computerized drill press for $$50,000$ . It is expected to have a five-year life and a $$5,000$ salvage value.Required:a. Compute
On January 1, 2008, Gert Enterprises purchased a parcel of land for $$12,000$ cash. At the time of purchase, the company planned to use the land for future expansion. In 2009, Gert Enterprises
Print Service Co. purchased a new color copier at the beginning of 2005 for $$35,000$ . The copier is expected to have a five-year useful life and a $$5,000$ salvage value. The expected copy
Quality Lumber Company purchased $$120,000$ of equipment on September 1, 2006.Required:a. Compute the amount of depreciation expense that is deductible under MACRS for 2006 and 2007, assuming that
On January 1,2006, Harris Machining Co. purchased a compressor and related installation equipment for $$64,000$ . The equipment had a three-year estimated life with a $$4,000$ salvage value.
On January 1, 2005, Valley Power Company overhauled four turbine engines that generate power for customers. The overhaul resulted in a slight increase in the capacity of the engines to produce power.
American Greetings Corporation manufactures and sells greeting cards and related items such as gift wrapping paper. CSX Corporation is one of the largest railway networks in the nation. The following

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