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121.Newton Company issued its $1,000,000, 7%, ten-year bonds to the public on January 1, 2016. The bonds pay interest annually, beginning on December 31, 2016. Newton Company received $1,154,420 in cash at the issuance of the bonds. The market rate of interest when the bonds were issued was 5%. Newton.
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112.The following information was available from the financial statements of Collateral, Inc. for the years 2016 and 2015 (in millions of dollars):          2016        2015 Cash flow from operating activities$5,968$5,456 Cash paid for purchases of property, plant, and equipment755812 Property, plant, and equipment, net6,0916,097 Dividends paid300300 Required: A. Calculate the capital acquisitions ratio for each of the.
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11.A negative financial leverage percentage occurs when a company has more debt than stockholders' equity. 12.The financial leverage percentage is positive when return on assets is greater than return on equity. 13.Earnings per share (EPS) is affected by treasury stock transactions. 14.The earnings quality ratio increases when net income increases..
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120.Brice Corporation reported the following information: 2016 Income Statement: Sales Revenue$8,200,000 Cost of goods sold 6,400,000 Gross profit1,800,000 Operating expenses (includes $200,000 depreciation expense)1,250,000 Pretax income550,000 Income tax expense (30% rate) 165,000 Net Income$385,000 Balance Sheet:   20162015 Accounts receivable$800,000$600,000 Inventory520,000480,000 Prepaid expenses110,000120,000 Accounts payable340,000310,000 Accrued liabilities80,00090,000 Income taxes payable25,00040,000 Unearned sales revenue100,000200,000 Compute Brice's cash paid for income taxes in 2016.    121.Use the following information to prepare a statement.
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True / False Questions 1.The statement of cash flows explains how the cash balance changed during a particular period of time. 2.Only highly liquid investments with original maturities of less than six months at the date of purchase qualify as cash equivalents. 3.The payment of interest on a note payable is.
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81.Which of the following transactions is not reported in the statement of cash flows as a cash flow from investing activities? A. Selling a depreciable asset for cash at a loss. B. Purchasing a patent using cash. C. Purchasing land in exchange for common stock. D. Purchasing shares of common stock of another.
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51.The following information has been provided to you by RKJ Company: Net income$300,000 Decrease in accounts payable$114,000 Increase in inventory$22,000 Increase in accounts receivable$24,000 Decrease in bonds payable$25,000 Loss on sale of a depreciable asset$19,000 Depreciation expense$40,000 Decrease in income taxes payable$12,000 Using the indirect method, what is the net cash provided by operating activities?  A. $231,000. B. $187,000..
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113.During 2017, Tommy's Toys reported the following: short-term borrowings of $419 million; long-term borrowings of $147 million; long-term debt repayments of $45 million; interest paid, $128 million; treasury shares purchased $632 million; and exercise of stock options by employees, $2 million. Required: A. Calculate the net cash flow from financing.
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Multiple Choice Questions 34.Which of the following statements is false?  A. Common stockholders have a residual claim on assets in the event of liquidation. B. Shares of stock held in the treasury are subtracted from the number of issued shares in the determination of the number of outstanding shares. C. Common.
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64.A company reported the following asset and liability balances at the end of 2015 and 2016: 20152016 Assets$150,000$180,000 Liabilities$70,000$80,000 If the company paid dividends totaling $5,000, what is the amount of net income for 2016?  A. $20,000. B. $105,000. C. $80,000. D. $25,000. 65.On December 15, 2016, the board of directors of Cross Corporation.
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112.Steamboat Company issued the following ten-year bonds on January 1, 2016: $100,000 maturity value, 6% interest payable annually on each December 31. The bonds were dated January 1, 2016 and the accounting period ends December 31. The bonds were issued for $93,000. Steamboat uses the effective-interest method for amortization. The.
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True / False Questions 1.A primary objective of financial statements is to provide information to current and potential investors and creditors.  2.Return on equity (ROE) by the DuPont model is a function of three ratios: net profit margin, return on assets, and financial leverage. 3.Return on equity (ROE) by the Du.
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Multiple Choice Questions 31.Which of the following transactions does not result in either a cash inflow or a cash outflow? A. A company purchased some of its own stock from a stockholder. B. Amortization of a patent. C. Payment of a cash dividend. D. Sale of equipment at book value. 32.Which of the following transactions.
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116.Complete the following statement of cash flows using the indirect method: Dakota CompanyStatement of Cash FlowsFor the Year Ended December 31, 2017 Cash flows from operating activities:   Net income, $20,000_________  Add or (subtract) items not affecting cash:   Depreciation expense, $3,000__________  Accounts receivable decrease, $2,000__________   Accounts payable decrease, $4,000__________  Net cash flow from operating activities _________ Cash flow from investing activities:   Cash.
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11.Under the indirect method, an increase in accounts receivable during the year will be added to net income. 12.If sales revenue was $1,800,000 and accounts receivable decreased $40,000 while unearned revenue increased $10,000 during the year, then cash collected from customers equals $1,850,000.  13.Under the indirect method, depreciation expense is.
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True / False Questions 1.Shares which a corporation has the ability to issue, as documented in its charter in the state where incorporated, are outstanding shares of stock.  2.There would be 100,000 shares of common stock outstanding when the number of shares authorized was 150,000, issued shares totaled 120,000, and 20,000.
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61.Which of the following transactions decreases the quality of income ratio? A. The cash purchase of equipment. B. The issue of stock in exchange for cash. C. Collecting cash for services to be provided in the future. D. Earning revenue that was previously recorded as unearned revenue. 62.Which of the following transactions would not.
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41.Which of the following would be added to net income when determining cash flows from operating activities under the indirect method? A. A decrease in accounts payable. B. Patent amortization expense. C. An increase in prepaid insurance. D. A gain on the sale of a depreciable asset. 42.Which of the following would be subtracted.
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Essay Questions 111.The charter of Delta Corporation specified a maximum of 25,000 shares of common stock. At the current date, 5,000 shares remain unissued, and 2,000 of the issued shares have been repurchased and are still held by Delta.Required: Calculate the number of shares that are: A. Authorized B. Issued C..
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94.The following information is provided for Bold Company for the year 2017: • Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding • Common stock, $100 par value, 2,000 shares issued and outstanding • Dividends in arrears for three prior years (2014­­-2016) • Total dividends declared and paid in 2017 were $50,000. How.
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91.Amanda Company reported income tax expense of $250,000. Beginning income taxes payable was $30,000, while ending income taxes payable was $25,000, and accounts payable decreased $10,000. How much cash was paid for taxes?  A. $280,000. B. $255,000. C. $245,000. D. $265,000. 92.Aaron Inc. reported operating expenses during 2017 of $765,000.
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119.The board of directors of Atlantic Corp. does is deciding whether to declare and pay a cash dividend or to declare and distribute a stock dividend.Required: Complete the following chart to show the overall effect on each financial statement item for a cash dividend and a stock dividend. Enter the.
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105.Marissa Company is preparing a statement of cash flows using the indirect method for the year ended December 31, 2017. The following data are available: Net income$30,000 Depreciation expense18,000 Inventory increase5,000 Wages payable decrease10,000 Accounts receivable decrease10,000 Accounts payable decrease7,000 Required: Prepare the operating activities section of the statement of cash flows using the indirect method for.
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21.When a company purchases equipment using common stock, the equipment purchase is reported as a financing activity. 22.When a company sells equipment for cash at a loss, cash flows from investing activities decreases. 23.Amortization of a patent reduces cash flows from investing activities. 24.Free cash flow measures the sufficiency of.
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110.The following information was reported from the statement of cash flows for Landlover's Restaurants for the years 2015 through 2017 (in millions of dollars):         2017       2016                     2015 Net income$45$42$27 Cash provided/(used) by operations12211289 Cash provided/(used) by investments(190)(275)(105) Cash provided/(used) by financing9014621 Required: A. Calculate the quality of income ratio for the years 2015 through 2017. Round.
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115.At the end of 2016, Washington Corporation reported a $40,000 balance in its common stock account (par value $1 per share). The treasury stock account balance was $720 (cost $6 per share). During 2016, the company declared and paid a cash dividend of $1.50 per share.Required: Calculate the total amount.
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125.Wedge Corporation has the following capital stock outstanding: $1 par value common stock, 250,000 shares. 8% preferred stock, par $100, 5,000 shares, cumulative, with 2 years in arrears. Cash dividends of $150,000 were declared and paid near the end of the current year.Required: A. Calculate the dividends paid to the.
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130.Determine the effect of the following transactions on the financial statement components identified. Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C. If the transaction does not.
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74.Wendell Company provided the following pertaining to its accounting year that ended December 31, 2016: • Common stock with a $10,000 par value was sold for $50,000 cash • Cash dividends totaling $20,000 were declared, of which $15,000 were paid • Net income was $70,000 • A 5% stock dividend resulted in a common.
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122.On January 1, 2016, the stockholders' equity section of Gibbons Corporation's balance sheet reported the following: Common stock, par $10, authorized 100,000 shares, issued 10,000 shares $100,000 Additional paid-in capital   50,000 Retained earnings 160,000 During 2016, the following selected transactions occurred (assume they occurred in the order given): April 1Issued a 10% stock dividend when the.
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21.The declaration and payment of a cash dividend on common stock results in a reduction of the issuing corporation's total stockholders' equity. 22.The dividend yield ratio is calculated as dividends per share divided by the number of shares outstanding. 23.The dividend yield ratio increases when the market price per share.
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Essay Questions 102.For each of the following items, indicate with the letter X whether the transaction would appear in the operating, investing, or financing activities section of the statement of cash flows, or is not reported in any one of these three categories. Assume the indirect method is used for reporting. TransactionActivity OperatingInvestingFinancingNone 1.Revenue.
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11.Net income increases when treasury stock is resold for an amount in excess of the amount paid when the common stock was repurchased. 12.Total stockholders' equity increases when treasury stock is sold for an amount less than its repurchase price. 13.Net income decreases when treasury stock is sold for an.
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84.Which of the following statements is false?  A. Both stock splits and stock dividends increase the number of common shares issued. B. Both stock splits and stock dividends increase the number of common shares outstanding. C. Stock splits reallocate amounts between retained earnings and contributed capital accounts. D. Both stock.
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108.Sagaworth Inc. reported the following information: 2017 Income Statement: Net loss$380,000 Depreciation expense150,000 Amortization expense25,000 Balance Sheet:   20172016 Accounts receivable$200,000$230,000 Inventory140,000160,000 Prepaid expenses40,00030,000 Accounts payable190,000180,000 Accrued liabilities50,00045,000 Taxes payable10,00020,000 Required: Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017 using the indirect method.   109.Below is the 2017 income statement for the Critters Corporation. Critters CorporationIncome.
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92.When a bond payable is issued at a premium, subsequent amortization of the premium does which of the following? A. Increases interest expense. B. Decreases the book value of the bonds. C. The amortization for each year the bond approaches maturity, when the effective-interest method is used, would decrease. D. Decreases the amount.
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129.Determine the effect of the following transactions on the financial statement components identified. Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C. If the transaction does not.
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109.On January 1, 2016, Clintwood Company issued a $1,000, ten-year, 10% bond payable (interest payable each December 31).Required: For the three assumptions below, complete the following schedule if the fiscal year end is December 31, and straight-line amortization is used:        TransactionSale @ 100Assumption 1Sale @ 96Assumption 2Sale @ 104Assumption 3 A.Cash received.
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71.Flow Company has provided the following information for the year ended December 31, 2016: • Cash paid for interest, $20,000 • Cash paid for dividends, $6,000 • Cash dividends received, $4,000 • Cash proceeds from bank loan, $29,000 • Cash purchase of treasury stock, $11,000 • Cash paid for equipment purchase, $27,000 • Cash received from issuance.
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104.Which of the following statements is not correct?  A. Issuance of common stock creates a financing activities cash inflow. B. Payment of a common stock cash dividend creates an operating activities cash outflow. C. Purchase of treasury stock creates a financing activities cash outflow. D. Issuance of preferred stock creates.
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118.Brice Corporation reported the following information: 2016 Income Statement: Sales Revenue$8,200,000 Cost of goods sold 6,400,000 Gross profit1,800,000 Operating expenses (includes $200,000 depreciation expense)1,250,000 Pretax income550,000 Income tax expense (30% rate) 165,000 Net Income$385,000 Balance Sheet:   20162015 Accounts receivable$800,000$600,000 Inventory520,000480,000 Prepaid expenses110,000120,000 Accounts payable340,000310,000 Accrued liabilities80,00090,000 Income taxes payable25,00040,000 Unearned sales revenue100,000200,000 Compute Brice's cash paid to suppliers for inventory for 2016.    119.Brice Corporation reported the following information: 2016 Income.
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Essay Questions 106.On March 1, 2016, Halbur Company, issued $500,000 of 6%, five-year bonds at par. The bonds were dated March 1, 2016, and the first annual interest payment will be on February 28, 2017. The accounting period ends December 31. Assume no adjusting entries have been made during the year.Required:.
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44.Which of the following statements about earnings per share (EPS) is correct?  A. Increased net income would cause earnings per share to decrease. B. Issuance of more common shares would cause earnings per share to increase. C. Purchasing treasury shares would cause earnings per share to decrease. D. EPS is.
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