accounti The process that begins with analyzing and journalizing
ng cycle transactions and ends with the post-closing trial balance.
Another name for the income summary account because it has
the effect o
contingent liabilities- Liabilities that may arise from past transactions if
certain events occur in the future.
current position analysis-A company's ability to pay its current
defined benefit plan-A pension plan that promises e
1. Dividends Per Share
National Furniture Company has 25,000 shares of cumulative preferred 2% stock, $75 par and 200,000
shares of $10 par common stock. The following amounts were distributed as dividends:
Classifying Cash Flows
Identify whether each of the following would be reported as an operating, investing, orfinancing activity on
the statement of cash flows:
a. Repurchase of common stock
b. Cash received from customers
c. Payment o
A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount
of working capital immediately after payment is
1. On January 1 of the current year, the Barton Corporation issued 10% bonds with a face value of
$200,000. The bonds are sold for $191,000. The bonds pay interest semiannually on June 30 and
December 31 and the maturity date is December 31, five years fr
1. Proceeds from Notes Payable
On October 12, Belleville Co. borrowed cash from Texas Bank by issuing a 30day note with a face amount of $70,000. Assume a 360-day year.
a. Determine the proceeds of the note, assuming the note carries an
interest rate of 6
1) Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount
rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are
2) Anderson Co. issued a $50,000, 60-day, discounted note to Na
Entries for issuing bonds and amortizing discount by straight-line method
On January 1, the first day of its fiscal year, Pretender Company issued $21,300,000 of five-year, 4% bonds to finance its
operations of producing and selling home improvement produ
Pension plan entries
Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees.
The plan requires quarterly installments to be paid to the funding agent, Whims Funds, by the fifteenth of the month
Which of the following is not an advantage of issuing bonds instead of common stock?
a.Earnings per share on common stock are always lower.
b.Stockholder control is not affected.
c.Differing types of bonds allow for multiple ways to structure financing, t
1. Long-Term Solvency Analysis
The following information was taken from Acme Company's balance sheet:
Fixed assets (net)
Total stockholders' equity
Determine the company's (a)
There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1) the direct
method and (2) the indirect method.
Repayments of bonds would be shown as a cash outflow in the investing section of the
It is not possible for one company to influence the operating policies of another company unless it owns more than 50%
interest in that company.
If the proceeds from the sale of bond investments exceed the carrying amount of the bonds, a gain i
1. Effect of Transactions on Cash Flows
State the effect (cash receipt or payment and amount) of each of the following transactions, considered
individually, on cash flows:
a. Sold equipment with a book value of $62,100 for $89,400.
b. Sold a new issue of
cash dividend-Stock that has a right to receive regular dividends that were not declared (paid) in
common stock-The stock outstanding when a corporation has issued only one class of stock.
cumulative preferred stock-Stock that has a right to
Chapter 10 Test
1. The double-declining-balance method is an accelerated depreciation method.
2. The natural resources of some companies include
minerals, trademarks, and land
metal ores, copyrights, and supplies
timber, equipment, and patents
Bond investment transactions
Journalize the entries to record the following selected bond investment transactions for Hall Trust (refer to the Chart of
Accounts for exact wording of account titles):
Purchased for cash $300,000 of Oates City 4% bond
Corporate Tax Rates
Self-Study Problem 11.1
1. Maple Corporation has taxable income of $275,000 for its tax year ending December 31, 2013. Calculate the
corporation's tax liability for 2013, before tax credits.
Tax liability $
$22,250 + (39% [$275,
Admitting new partner with bonus
1. L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share
income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment
was revalued downward by $8,
1) Journalizing partner's original investment
Catrina Santana contributed a patent, accounts receivable, and $23,000 cash to a partnership. The patent had a book
value of $8,000. However, the technology covered by the patent appeared to have significant m
1. As part of the initial investment, Jackson contributes accounts receivable that had a balance of
$22,500 in the accounts of a sole proprietorship. Of this amount, $3,000 is deemed completely
worthless. For the remaining accounts, the partnership will e
1. Dividends Per Share
Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 22,000 shares of
cumulative preferred 3% stock, $120 par, and 73,000 shares of $5 par common. During its first four years
of operations, the follo
Valuing available-for-sale securities at fair value
On January 1, 2016, Valuation Allowance for Available-for-Sale Investments had a zero balance. On
December 31, 2016, the cost of the available-for-sale securities was $85,100, and the fair value was
If $1,000,000 of 8% bonds are issued at 102 3/4, the amount of cash received from the sale is
If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value
1. Which of the following is the appropriate general journal entry to record the
declaration of cash dividends?
a. Retained Earnings
b. Cash Dividends Payable
c. Paid-In Capital
Cash Dividends Payable
d. Cash Dividends
Cash Dividends Payable
Issuing bonds at face amount
On January 1, 2016, the first day of the fiscal year, a company issues a $500,000, 5%, 10-year bond that
pays semiannual interest of $12,500 ($500,000 x 5% x year), receiving cash of $500,000.
Journalize the entries to record
Investments in certificates of deposit and other securities that do not normally change in value are disclosed on the
balance sheet as
b.cash and cash equivalents.
c.unearned investment revenue.
Cash is generally inve
The following revenue transactions occurred during November:
Issued Invoice No. 162 to Dawkins Co. for services provided on account, $320.
Issued Invoice No. 163 to City Electric Inc. for services provided on account, $
The balance in the supplies account, before adjustment at the end of the year, is $5,710. The year end is December 31.
Journalize the December 31 adjusting entry required if the amount of supplies on hand at the end of the year is $1,335.