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130.Journalize the entries to record the following selected transactions of Oliver Co.: (a) Purchased $100,000 of Kruse Co. 8% bonds at par value plus accrued interest of $2,000. (b) Received first semiannual interest payment. (c) Sold the bonds at 97 plus accrued interest of $1,500. 131.Albright Company purchased as a long-term investment $500,000 of Benton Corporation 10-year,.
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86.If one company owns more than 50% of the common stock of another company A.a partnership exists. B.a parent–subsidiary relationship exists. C.the company whose stock is owned must be liquidated D.the cost method should be used to account for the investment. 87.Yankton Company began the year without an investment portfolio. During the year they purchased.
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123.During 2012, its first year of operations, Makala Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Oceanna Company 700 $29,000 Rockledge, Inc. 1,900 41,000 Assume that as of December 31, 2012, the Oceanna Company stock had a market value of $49 per share and Rockledge, Inc. stock had a market value of $20 per share. Makala had.
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111.If accounts payable have increased during a period A.revenues on an accrual basis are less than revenues on a cash basis. B.expenses on an accrual basis are less than expenses on a cash basis. C.expenses on an accrual basis are the same as expenses on a cash basis. D.expenses on an accrual basis are.
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140.Newville Corporation reported net income of $50,000 in 2012. They have 10,000 shares of $100 par, 6% preferred stock and 50,000 shares of $2 common stock outstanding. During 2012 Newville paid the preferred stockholder’s a $6 per share dividend and also paid $20,000 to common shareholders. The market value of.
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11.Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable. 12.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. 13.The direct method of preparing.
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128.Durrand Corporation’s accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $2,500 from sale of land. Reconcile a net income of.
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186.Glover Corporation issued $2,000,000 of 7.5%, 6-year bonds dated March 1, 2011, with semiannual interest payments on September 1 and March 1. The bonds were issued on March 1, 2011, at 97. Glover’s year-end is December 31. a) Were the bonds issued at a premium, a discount, or at par? b) Was.
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71.The order of presentation of activities on the statement of cash flows is A.operating, investing, and financing. B.operating, financing, and investing. C.financing, operating, and investing. D.financing, investing, and operating. 72.Financing activities include A.lending money. B.acquiring investments. C.issuing debt. D.acquiring long-lived assets. 73.Investing activities include A.collecting cash on loans made. B.obtaining cash from creditors. C.obtaining capital from owners. D.repaying money previously borrowed. 74.Cash receipts from interest.
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135.Discuss the appropriate financial treatment when an investor has a greater than 50% ownership in another company. 136.Discuss the similarities and differences in reporting trading securities, available-for-sale securities and held-to-maturity securities. 137.The cost and fair value of the trading securities held by AdBrand Company as of December 31, 2012 are as follows: Name Number.
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136.Identify which section the statement of cash flows (using the indirect method) would present information regarding the following activities: (Use O for operating, I for investing, or F for financing): a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income f. Paid cash dividends g. Purchased treasury stock h. Sold long-term.
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143.Master Designs Company has cash flows for operating activities of $300,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace existing capacity. What is the free cash flow for Master Designs? 144.Indicate the section (operating activities, investing activities, financing.
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76.Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation? A.debit Investment in Worton Corporation;.
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138.Selected data taken from the accounting records of Laser Inc. for the current year ended December 31, are as follows: Balance, December 31 Balance, January 1 Accrued operating expenses $5,590 $6,110 Accounts payable (merchandise creditors) 41,730 46,020 Inventories 77,350 84,110 Prepaid expenses 3,250 3,900 During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000..
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132.Sales reported on the income statement were $340,000. The accounts receivable balance declined $17,000 over the year. Determine the amount of cash received from customers. 133.Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the.
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124.For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. Receipt of dividends b. Payment of dividends c. Purchase of equipment d. Net income e. Issuance of the company’s common stock f. Amortization expense 125.For each of the following, identify whether.
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21.The equity method is usually more appropriate for accounting for investments where the purchaser does not have significant influence over the investee. 22.When bonds held as long-term investments are purchased at a price other than the face value, the premium or discount should be amortized over the remaining life of the.
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154.The Dickinson Company reported net income of $155,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $20,000 $15,000 Accounts receivable 19,000 32,000 Inventories 50,000 65,000 Accounts payable 12,000 18,000 Instructions Prepare.
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61.A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under A.investing activities B.financing activities C.noncash investing and financing activities D.operating activities 62.Cash paid for preferred stock dividends should be shown on the statement of cash flows under A.investing activities B.financing activities C.noncash investing and.
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51.Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends. 52.Which of the following is not one of the four basic financial statements? A.balance sheet B.statement of cash flows C.statement of changes in financial position D.income statement 53.Which of.
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153.The comparative balance sheet of Barry Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form: Year Year 2011 2010 Cash $72,000 $42,500 Accounts receivable (net) 61,000 70,200 Inventories 121,000 105,000 Investments ..... 100,000 Equipment 515,000 425,000 Accumulated depreciation-equipment (153,000) (175,000) $616,000 $567,700 Accounts payable $59,750 $47,250 Bonds payable, due 2011 ..... 75,000 Common stock, $20 par 375,000 325,000 Premium on common stock 50,000 25,000 Retained earnings 131,250 95,450 $616,000 $567,700 Additional data for the current year are as follows: (a) Net income, $75,800. (b) Depreciation reported on income.
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120.Skyline, Inc. purchased a portfolio of available-for-sale securities during 2012. The cost and fair value of this portfolio on December 31, 2012, was as follows: Name Number of Shares Total Cost Total Fair Value Blackstone, Inc. 400 $4,000 $5,200 Flagler Company 200 3,000 2,700 Patternson Corporation 600 7,500 9,800 Total $14,500 $17,700 Required: Provide the journal entry to record the adjustment of the available-for-sale security portfolio to fair value on.
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140.The income statement disclosed the following items for 2011: Depreciation expense $36,000 Gain on disposal of equipment 21,000 Net income 317,500 Balances of the current assets and current liabilities accounts changed between December 31, 2010 and December 31, 2011, as follows: Increase in accounts receivable $5,600 Decrease in inventory 3,200 Decrease in prepaid insurance 1,200 Decrease in account payable 3,800 Increase in income taxes payable 1,200 Increase in.
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108.On September 1, 2012, Parsons Company purchased $84,000, 10 year, 7% government bonds at 100 plus accrued interest. The semi-annual interest payment dates are June 30 and December 31. Interest calculations are done by the month. Required: (1) Journalize the entry to record the bond purchase. (2) Journalize the receipt of interest on December.
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146.Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method: (a) Increase in prepaid expenses (b) Amortization of patents (c) Increase in salaries payable (d) Gain on sale of fixed assets (e) Decrease in accounts receivable (f) Increase in notes receivable due in 60.
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101.Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? A.depreciation expense B.an increase in inventory C.a gain on the sale of equipment D.dividends declared and paid 102.The net income reported on the income statement for the current year was $250,000. Depreciation recorded.
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11.An equity investment in less than 20% of another company’s stock is accounted for using the cost method. 12.Ordinarily, a corporation owning a significant portion of the voting stock of another corporation accounts for the investment using the equity method. 13.The investor carrying an investment by the equity method records cash dividends.
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149.The board of directors declared cash dividends totaling $242,000 during the current year. The comparative balance sheet indicates dividends payable of $48,000 at the beginning of the year and $63,000 at the end of the year. What was the amount of cash payments to stockholders during the year? 150.An analysis of.
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113.Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1, 2012. Marco reported net income of $80,000 and declared dividends of $20,000 during 2012. How much would Ramiro adjust their investment in Marco Company under the equity method? 114.Pepito Company purchased 40% of the outstanding stock of.
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117.On March 1, 2011, Chase Inc. purchases 35% of the outstanding shares of Glory Corporation stock for $325,000. On December 31, 2011, Glory reports net income of $162,000. On January 15, 2012, Glory pays total dividends to stockholders of $33,000. Required: Journalize the three transactions described above. Date Accounts DR CR 118.On January 1, 2012, Valuation.
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91.Equipment with an original cost of $60,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would A.increase by $33,000 B.decrease by $7,000 C.increase by $40,000 D.decrease by $27,000 92.On the statement of cash flows, the cash flows from financing activities section would include.
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103.Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion. 104.On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, 8% Manus Corporation bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when purchasing the bonds? 105.On May 1, 2012,.
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1.Although marketable securities may be retained for several years, they continue to be classified as temporary, provided they are readily marketable and can be sold for cash at any time. 2.As with other assets, the cost of a bond investment includes all costs related to the purchase. 3.If the bonds are purchased.
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138.Following is data for the available-for-sale securities held by AdBrand Company as of December 31, 2012. Name Number of Shares Cost per Share Fair Value per Share Total Cost Total Fair Value Capstone, Inc. 1,200 $15.00 $15.40 Dayton Corp. 800 8.00 8.25 Huddle Company 700 14.10 13.00 Stanton Company 600 12.35 10.77 Total Required: (1) Complete the table above to find the total cost and fair value for the company’s trading securities portfolio. (2) Calculate.
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152.The comparative balance sheet of Posner Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form: Year Year 2011 2010 Cash $53,000 $50,000 Accounts receivable (net) 37,000 48,000 Inventories 108,500 100,000 Investments ..... 70,000 Equipment 573,200 450,000 Accumulated depreciation-equipment (142,000) (176,000) $629,700 $542,000 Accounts payable $62,500 $43,800 Bonds payable, due 2011 ..... 100,000 Common stock, $10 par 325,000 285,000 Paid-in capital in excess of par-- common stock 80,000 55,000 Retained earnings 162,200 58,200 $629,700 $542,000 The income statement for the current year is as.
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31.Available-for-sale securities are securities that management expects to sell in the future, but are not actively traded for profit. 32.Trading securities are reported on the balance sheet at cost. 33.Any difference between the fair market values of the securities and their cost is a realized gain or loss. 34.Unrealized gains and losses on.
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157.Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: End Beginning Cash $62,000 $73,000 Accounts receivable (net) 75,000 60,000 Inventories 54,000 47,000 Accounts payable (merchandise creditors) 43,000 37,000 Salaries payable 2,800 3,800 Sales (on account) 210,000 Cost of merchandise sold 70,000 Operating expenses other than depreciation 67,000 Use the direct method to prepare the cash flows from operating activities section of a statement.
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66.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale? A.$12,750 gain B.$600 gain C.$600 loss D.$9,250 loss 67.Held to maturity securities A.are reported at fair market value B.include stocks as well as bonds C.may.
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46.Temporary investments A.are reported as current assets B.include cash equivalents C.do not include equity securities D.all of the above 47.Which of the following is not a reason to invest excess cash in temporary investments? A.earn interest revenue B.influence the operations of another company C.receive dividends D.realize gains from the increase in market value of the securities 48.Investment is certificates of.
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101.Match each of the following investment terms with the appropriate definition below. 1.What occurs when a company purchases 50% or more of another company’s stock. Trading Securities 2.Debt and equity securities purchased and sold to earn short-term profits from changes in the market price. Equity Securities 3.When using this, dividends are treated as a reduction.
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41.Cash inflows and outflows are not netted in the investing or financing sections of the statement of cash flows but are separately disclosed to give the reader full information. 42.There is no difference in the Investing and Financing sections of the statement of cash flows using the indirect and direct method. 43.Under.
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56.Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be: A.Debit: Cash $105,000; Credit: Investment in Bonds $104,500 and Interest Revenue $500 B.Debit: Cash $105,000; Credit: Investment in.
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133.Prepare the journal entries for the following transactions for Morgan Co. (a) Morgan Co. purchased 23,000 shares of the total of 100,000 outstanding shares of Gordon Corp. stock for $10 per share plus a $400 commission. (b) Gordon Corp.'s total earnings for the period are $80,000. (c) Gordon Corp. paid a total of $45,000 in cash.
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