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Study Resources (Accounting)

9) On January 2, 2011, Pilates Inc. paid $700,000 for all of the outstanding common stock of Spinning Company, and dissolved Spinning Company. The carrying values for Spinning Company's assets and liabilities are recorded below. Cash$200,000 Accounts Receivable220,000 Copyrights (purchased)400,000 Goodwill120,000 Liabilities(180,000) Net assets$760,000 On January 2, 2011, Spinning anticipated collecting $185,000 of the recorded Accounts Receivable..
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6) Benchmarking is the comparison of a company's current year results with an earlier year's performance. 7) Benchmarking is often done by comparing a company against either a key competitor or against the industry average. 8) Which of the following is the base amount when performing vertical analysis of an income statement? A).
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6) Dotterel Corporation paid $200,000 cash for 40% of the voting common stock of Swamp Land Inc. on January 1, 2011. Book value and fair value information for Swamp on this date is as follows: BookFair AssetsValuesValues Cash$60,000$60,000 Accounts receivable120,000120,000 Inventories80,000100,000 Equipment340,000400,000 $ 600,000$ 680,000 Liabilities & Equities Accounts payable$200,000$200,000 Note payable120,000100,000 Capital stock200,000 Retained earnings  80,000                        $600,000$300,000 Required: .
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11) On January 1, 2012, Packaging International purchased 90% of Shipaway Corporation's outstanding shares for $135,000 when the fair value of Shipaway's net assets were equal to the book values.  The balance sheets of Packaging and Shipaway Corporations at year-end 2011 are summarized as follows: PackagingShipaway Assets$590,000$180,000 Liabilities$70,000$30,000 Capital stock360,00090,000 Retained earnings160,00060,000 If a consolidated balance.
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20) Keynse Company owns 70% of Subdia Incorporated. The Investment in Subdia qualifies as a business reporting unit under FASB 142, and Keynse has reported goodwill in the amount of $200,000 with respect to its acquisition of Subdia. Subdia's $10 par common stock is currently trading for $92 per share,.
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4) Wader's Corporation paid $120,000 for a 25% interest in Shell Company on July 1, 2010. No information is available on the fair value of Shell's assets and liabilities. Assume the equity method. Shell's trial balances at July 1, 2010 and December 31, 2010 were as follows: DebitsDecember 31July 1 Current assets$100,000$50,000 Noncurrent.
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7) The balance sheets of Palisade Company and Salisbury Corporation were as follows on December 31, 2010: PalisadeSalisbury Current Assets$260,000$120,000 Equipment-net440,000480,000 Buildings-net600,000200,000 Land100,000200,000 Total Assets$1,400,000$1,000,000 Current Liabilities100,000120,000 Common Stock, $5 par1,000,000400,000 Additional paid-in Capital100,000280,000 Retained Earnings200,000200,000 Total Liabilities and Stockholders' equity$1,400,000$1,000,000 On January 1, 2011 Palisade issued 30,000 of its shares with a market value of $40 per share in exchange for.
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3) At December 31, 2011, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophocles Company. In addition, Pandora agreed to pay the owners of Sophocles an additional $200,000 if a specific contract achieved the profit levels that were targeted by.
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18) On January 1, 2010, Petrel, Inc. purchased 70% of the outstanding voting common stock of Ocean, Inc., for $2,600,000. The book value of Ocean's net equity on that date was $3,100,000. Book values were equal to fair values except as follows: BookFair Assets & LiabilitiesValuesValues Equipment$ 250,000$ 190,000 Building600,000700,000 Note payable270,000240,000 Required: Prepare a schedule to.
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5) Saveed Corporation purchased the net assets of Penny Inc. on January 2, 2011 for $1,690,000 cash and also paid $15,000 in direct acquisition costs. Penny dissolved as of the date of the acquisition. Penny's balance sheet on January 2, 2011 was as follows: Accounts receivable-net$190,000Current liabilities$235,000 Inventory480,000Long term debt650,000 Land10,000Common stock ($1.
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49) The balance sheet of Atlantis Inc. is below: Atlantis Inc. Comparative Balance Sheet December 31, 2016 and 2015 20162015 Assets Total Current Assets$200,000$100,000 Property, Plant, and Equipment, Net550,000500,000 Other Assets50,00050,000 Total Assets$800,000$650,000 Liabilities Total Current Liabilities$150,000$100,000 Long-term Debt350,000250,000 Total Liabilities500,000350,000 Stockholders' Equity Total Stockholders' Equity300,000300,000 Total Liabilities and Stockholders' Equity              $800,000$650,000 Calculate working capital for both years. 50) The balance sheet of Atlantis Inc. is below: Atlantis Inc. Comparative.
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8) Sandpiper Inc. acquired a 30% interest in Shore Corporation for $27,000 cash on January 1, 2011, when Shore's stockholders' equity consisted of $30,000 of capital stock and $20,000 of retained earnings. Shore Corporation reported net income of $18,000 for 2011. The allocation of the $12,000 excess of cost over.
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6) The merchandise inventory turnover ratio measures how profitably a company sells its average level of merchandise inventory during a year. 7) To calculate the acid-test ratio, merchandise inventory and prepaid expenses are ignored. 8) The current ratio is a key indicator of a company's ability to pay current liabilities. 9) Days' sales.
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11) With respect to goodwill, an impairment A) will be amortized over the remaining useful life. B) is a two-step process which analyzes each business reporting unit of the entity. C) is a one-step process considering the entire firm. D) occurs when asset values are adjusted to fair value in a purchase. Use the following.
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Exercises 1) Plum Corporation paid $700,000 for a 40% interest in Satin Company on January 1, 2011 when Plum's stockholders' equity was as follows: 10% cumulative preferred stock, $100 par$  500,000 Common stock, $10 par value300,000 Other paid-in capital 400,000 Retained earnings     800,000 Total stockholders' equity$2,000,000 On this date, the book values of Plum's assets and.
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23) Donald Corp. reported the following revenues and net income amounts. (In millions)20172016201520142013 Revenue$728$675$500$485$452 Cost of goods sold650602456403398 Calculate Donald's trend analysis1) An analysis of a financial statement that reveals the relationship of each statement item to its base amount, which is the 100% figure, is known as vertical analysis. 2) In a vertical analysis.
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Exercises 1) Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2011. Parrot borrowed $2,000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly. The fair value and book value of Sparrow's recorded assets and liabilities as.
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9) Barkin Corporation's accounting records include the following items, listed in no particular order, for the year ending December 31, 2015: Other Revenues and (Expenses)              Gain on Discontinued Operations              $75,000 Gain on sale of Equipment              $12,000Extraordinary Loss15,000 Loss on disposal of Equipment              5,000Cost of Goods Sold285,000 Net Sales650,000Operating Expenses120,000 The income tax rate for the.
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10) Stilt Corporation purchased a 40% interest in the common stock of Shallow Company for $2,660,000 on January 1, 2011, when the book value of Shallow's net equity was $6,000,000. Shallow's book values equaled their fair values except for the following items: BookFair ValueValueDifference Inventories$450,000$500,000$ 50,000 Land100,000450,000350,000 Building-net400,000200,000(200,000) Equipment-net350,000400,00050,000  Required: .
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15) Shoreline Corporation had $3,000,000 of $10 par value common stock outstanding on January 1, 2009, and retained earnings of $1,000,000 on the same date. During 2009, 2010, and 2011, Shoreline earned net incomes of $400,000, $700,000, and $300,000, respectively, and paid dividends of $300,000, $550,000, and $100,000, respectively. On January.
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Multiple Choice Questions 1) What method must be used if FASB Statement No. 94 prohibits full consolidation of a 70% owned subsidiary? A) The cost method B) The Liquidation value C) Market value D) Equity method 2) From the standpoint of accounting theory, which of the following statements is the best justification for the preparation of.
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20) Data for Martin Corp. and Tante Inc. as follows: MartinTante Net Sales$25,000$32,500 Cost of Goods Sold18,50022,360 Other Expenses2,1505,000 Net Income$4,350$5,140 Prepare a comparative common-size income statement for Martin Corp and Tante Inc. for the year ending December 31, 2016. Round off the percentages to two decimal places. Use a multi-step format for the income statement. 1).
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Multiple Choice Questions 1) What method of accounting will generally be used when one company purchases less than 20% of the outstanding stock of another company? A) Only the fair value method may be used. B) Only the equity method may be used. C) Either the fair value method or the equity method may.
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11) Assume that Pansy Incorporated used the cost method of accounting for its investment in Sunflower. The balance in the Investment in Sunflower account at December 31, 2013 was A) $76,700. B) $80,000. C) $83,300. D) $95,000. 12) Assume that Pansy has significant influence and uses the equity method of accounting for its investment in.
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8) On January 2, 2011, Pilates Inc. paid $900,000 for all of the outstanding common stock of Spinning Company, and dissolved Spinning Company. The carrying values for Spinning Company's assets and liabilities are recorded below. Cash$200,000 Accounts Receivable220,000 Copyrights (purchased)400,000 Goodwill120,000 Liabilities(180,000) Net assets$760,000 On January 2, 2011, Spinning anticipated collecting $185,000 of the recorded Accounts Receivable..
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18) Atlantis Inc. has the following data: Atlantis Inc. Comparative Balance Sheet December 31, 2016 and 2015 20162015 Assets Total Current Assets$200,000$100,000 Property, Plant, and Equipment, Net550,000500,000 Other Assets50,00050,000 Total Assets$800,000$650,000 Liabilities Total Current Liabilities$150,000$100,000 Long-term Debt350,000250,000 Total Liabilities500,000350,000 Stockholders' Equity Total Stockholders' Equity300,000300,000 Total Liabilities and Stockholders' Equity              $800,000              $650,000 Perform a vertical analysis of Atlantis's balance sheet for each year. (Round your percentage answers to.
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16) Prepare a vertical analysis report of the income statement shown below. (Round off the percentages to two decimal places.)   2015 Net Sales$7,000 Cost of Goods Sold3,800 Gross Profit$3,200 Operating Expenses: Selling Expenses$950 Administrative expenses670 Total Expenses$1,620 Operating Income$1,580 Other Revenues and (Expenses): Interest Revenue0 Interest Expense(750) Total Revenues and (Expenses)              ($750) Income Before Taxes$830 Income Tax Expense150 Net Income$680 17) Prepare the vertical analysis report of.
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2) The income from continuing operations helps investors make predictions about the company's past performance. 3) The disposal of a financial segment would be reported as discontinued operations. 4) Gains and losses on the sale of plant assets are also reported as discontinued operations. 5) Extraordinary items are unusual and infrequent in nature. 6).
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20) Data for Nobell Inc. is as follows: 20152014 Net Sales$850,000$798,000 Cost of Goods Sold635,000580,000 Selling and Administrative Expenses              50,000              35,000 Other Expenses20,00015,000 Income Tax40,00055,000 Prepare a horizontal analysis of the comparative income statement of Nobell Inc. (Round percentagechanges to one decimal place.) Use a multi-step income statement. 21) Atlantis Inc. provides the following historical data: 201620152014201320122011 Net sales$4,970$4,500$3,980$3,270$4,750$4,400 Prepare the.
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14) Shebing Corporation had $80,000 of $10 par value common stock outstanding on January 1, 2010, and retained earnings of $120,000 on the same date. During 2010 and 2011, Shebing earned net incomes of $30,000 and $45,000, respectively, and paid dividends of $8,000 and $10,000, respectively. On January 1, 2010, Pentz.
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Multiple Choice Questions 1) Which of the following is not a reason for a company to expand through a combination, rather than by building new facilities? A) A combination might provide cost advantages. B) A combination might provide fewer operating delays. C) A combination might provide easier access to intangible assets. D) A combination might.
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7) On January 1, 2011, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown below. AssetsBookFair ValuesValues Cash$40,000$40,000 Accounts receivable100,00090,000 Inventories40,00050,000 Equipment   180,000  210,000  $360,000$390,000 Liabilities & Equities Accounts payable$110,000$110,000 Note payable50,00040,000 Capital stock100,000 Retained earnings 100,000          $360,000$150,000 Required: .
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6) Bigga Corporation purchased the net assets of Petit, Inc. on January 2, 2011 for $380,000 cash and also paid $15,000 in direct acquisition costs. Petit, Inc. was dissolved on the date of the acquisition. Petit's balance sheet on January 2, 2011 was as follows: Accounts receivable-net$90,000Current liabilities$75,000 Inventory 220,000 Long term.
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11) Samantha's Sporting Goods had net assets consisting of the following: Book ValueFair Value Cash150,000 150,000 Inventory820,000 960,000 Building and Fixtures330,000 310,000 Liabilities(90,000)(88,000) Pedic Incorporated purchased Samantha's Sporting Goods, and immediately dissolved Samantha's as a separate legal entity. Requirement 1: If Samantha's was purchased for $1,000,000 cash, prepare the entry recorded by Pedic. Requirement 2:.
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3) Pancake Corporation saw the potential for vertical integration and purchases a 15% interest in Syrup Corp. on January 1, 2010, for $150,000.  At that date, Syrup's stockholders' equity included $200,000 of $10 par value common stock, $300,000 of additional paid in capital, and $500,000 retained earnings.  The companies began.
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36) Peartree Inc. provides the following data: 2015 2014 Cash $40,000 $25,000 Accounts Receivable, Net 98,000 62,000 Merchandise Inventory 70,000 50,000 Property, Plant, and Equipment, Net 180,000 120,000 Total assets $388,000 $257,000 Additional information: Net sales $500,000 Cost of Goods Sold 150,000 Interest expense 20,000 Net income 180,000 Calculate the return on total assets for the year 2015. A) 67.25% B) 62.02% C) 72.36% D) 65.00% 37) Peartree Inc. provides the following income statement for the year 2015: 2015 Net Sales $240,000 Cost of Goods Sold 110,000 Gross.
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17) For 2010, 2011, and 2012, Squid Corporation earned net incomes of $40,000, $70,000, and $100,000, respectively, and paid dividends of $24,000, $32,000, and $44,000, respectively. On January 1, 2010, Squid had $500,000 of $10 par value common stock outstanding and $100,000 of retained earnings. On January 1 of each of.
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13) Balance sheet information for Sphinx Company at January 1, 2011, is summarized as follows: Current assets$230,000Liabilities$300,000 Plant assets450,000Capital stock $10 par200,000      Retained earnings 180,000 $680,000$680,000 Sphinx's assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000. On January 2, 2011, Pyramid Corporation issues 20,000 shares of its $10.
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