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10-1 Reporting and Analyzing Liabilities MATCHING 295.Match the items below by entering the appropriate code letter in the space provided.               A.Serial bondsF.Current ratio               B.Debenture bondsG.Straight-line method of amortization               C.Bond indentureH.Times interest earned               D.Market interest rate I.Callable bonds               E.Discount on bonds payableJ.Maturity date ____              1.Bonds subject to retirement at a stated dollar amount prior.
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10-1 Reporting and Analyzing Liabilities Ex. 269 Hensley, Inc. reports the following liabilities (in thousands) on its January 31, 2014, balance sheet and notes to the financial statements. Accounts payable$3,463.9 Accrued pension liability1,215.2 Property taxes payable1,158.1 Bonds payable1,961.2 Current portion of long-term debt1,992.2 Income taxes payable235.2 Notes payable—long-term9,246.7 Operating leases1,641.7 Mortgage payable435.6 Federal income taxes payable558.1 Salaries and wages payable2,563.6 Unused operating line of credit3,337.6 Warranty.
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10-1 Reporting and Analyzing Liabilities Exercises Ex. 261 Brewer Company has the following selected accounts after posting adjusting entries: Accounts Payable$  55,000 Notes Payable, 3-month90,000 Accumulated Depreciation—Equipment14,000 Notes Payable, 5-year, 8%75,000 Payroll Taxes Expense6,000 Interest Payable5,000 Mortgage Payable180,000 Sales Taxes Payable23,000 Instructions (a)Prepare the current liability section of Brewer Company's balance sheet, assuming $12,000 of the mortgage is payable next year. (b)Comment on Brewer’s liquidity,.
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11-1 Reporting and Analyzing Stockholders’ Equity 91.If the market value of the assets received and the market value of the stock issued are both available, then what amount should be used to value the assets? a.Market value of the stock. b.Market value of the assets. c.Par value of the stock. d.The more clearly determinable market value. 92.Johnson.
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11-1 Reporting and Analyzing Stockholders’ Equity 191.The payout ratio is computed by dividing a.total cash dividends paid by retained earnings. b.dividends paid per share by net income. c.total cash dividends paid by net income. d.dividends paid per share by year-end stock price. 192.The return on common stockholders’ equity is computed by dividing net income a.by ending common stockholders’.
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11-1 Reporting and Analyzing Stockholders’ Equity Ex. 227 Miles Co. had these transactions during the current period. June12Issued 50,000 shares of $3 stated value common stock for cash of $250,000. July11Issued 2,000 shares of $100 par value preferred stock for cash at $108 per share. Nov.28Purchased 2,000 shares of treasury stock for $10,000. Instructions Prepare the journal entries.
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11-1 Reporting and Analyzing Stockholders’ Equity 21.The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders’ equity. 22.The journal entry to record the purchase of treasury stock will cause total stockholders’ equity to decrease by the amount of the cost of the treasury stock. 23.The number.
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10-1 Reporting and Analyzing Liabilities SHORT-ANSWER ESSAY QUESTIONS S-A E 296 (a)Identify three taxes commonly paid by employers on employees' salaries and wages. (b)Where in the financial statements does the employer report taxes withheld from employees' pay? S-A E 297 (a)What is a convertible bond? (b)Discuss the advantages of a convertible bond from the standpoint of the bondholders.
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10-1 Reporting and Analyzing Liabilities 211.Oliver Company issued $800,000 of 6%, 5-year bonds at 98. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date? a.              $48,000 b.              $24,000 c.              $49,600 d.              $51,200 *212.Foley Company issued $800,000 of 6%, 5-year bonds at 98, which pays interest annually. Assuming.
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11-1 Reporting and Analyzing Stockholders’ Equity 101.The acquisition of treasury stock by a corporation a.increases its total assets and total stockholders’ equity. b.decreases its total assets and total stockholders’ equity. c.has no effect on total assets and total stockholders’ equity. d.requires that a gain or loss be recognized on the income statement. 102.A corporation purchases 15,000 shares.
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11-1 Reporting and Analyzing Stockholders’ Equity 131.The net effects on the corporation of the declaration and payment of a cash dividend are to a.decrease liabilities and decrease stockholders’ equity. b.increase stockholders’ equity and decrease liabilities. c.decrease assets and decrease stockholders’ equity. d.increase assets and increase stockholders’ equity. 132.The board of directors of Benson Company declared a cash.
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10-1 Reporting and Analyzing Liabilities 241.Thayer Company purchased a building on January 2 by signing a long-term $2,520,000 mortgage with monthly payments of $23,100. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a a.              debit to the Cash account for $23,100. b.              credit.
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10-1 Reporting and Analyzing Liabilities 201.From an accounting standpoint, all of the following are contingencies that must be evaluated for off-balance sheet purposes except a.              product warranties. b.              general business risks. c.              money-back guarantees for products. d.              environmental cleanup obligations.               202.A measure of a company’s solvency is the a.              acid-test ratio. b.              current ratio. c.              times interest earned. d.              asset.
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11-1 Reporting and Analyzing Stockholders’ Equity 141.Which of the following is not a significant date with respect to dividends? a.The declaration date. b.The incorporation date. c.The record date. d.The payment date. 142.On the dividend record date a.a dividend becomes a current obligation. b.no entry is required. c.an entry may be required if it is a stock dividend. d.Dividends Payable is debited. 143.Which.
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11-1 Reporting and Analyzing Stockholders’ Equity Be. 224 The following information is available for Epstein Corporation  2014 2013 Average common stockholders’ equity$1,500,000$1,000,000 Average total stockholders’ equity2,000,0001,500,000 Common dividends declared and paid72,00050,000 Preferred dividends declared and paid30,00030,000 Net income180,000150,000 Instructions Compute the payout ratio and return on common stockholders’ equity for both years. Briefly comment on your findings. Ans: N/A, LO: 8, Bloom:.
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11-1 Reporting and Analyzing Stockholders’ Equity 121.On January 1, McCarver Corporation had 600,000 shares of $10 par value common stock outstanding. On March 31 the company declared a 10% stock dividend. Market value of the stock was $15/share. As a result of this event, a.McCarver’s Paid-in Capital in Excess of Par Value account.
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10-1 Reporting and Analyzing Liabilities *Ex. 274 Garrison Company issued $2,000,000, 7%, 20-year bonds on January 1, 2014, at 105. Interest is payable annually on January 1. Garrison uses straight-line amortization for bond premium or discount. Instructions Prepare the journal entries to record the following events. (a)The issuance of the bonds. (b)The accrual of interest and the.
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11-1 Reporting and Analyzing Stockholders’ Equity Be. 216 An inexperienced accountant for Teahan Corporation made the following entries. July1Cash.......................................170,000 Common Stock............................170,000 (Issued 20,000 shares of no-par common stock, stated value $5 per share) Sept.1Common Stock................................36,000 Retained Earnings.............................24,000 Cash...................................60,000 (Purchased 4,000 shares issued on July 1 for the treasury at $15 per share) Instructions On the basis of the explanation for each entry, prepare the.
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11-1 Reporting and Analyzing Stockholders’ Equity 71.If an investment firm underwrites a stock issue, the a.risk of being unable to sell the shares stays with the issuing corporation. b.corporation obtains cash immediately from the investment firm. c.investment firm has guaranteed profits on the sale of the stock. d.issuance of stock is likely to be directly to.
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11-1 Reporting and Analyzing Stockholders’ Equity 51.Which one of the following would not be considered an advantage of the corporate form of organization? a.Limited liability of stockholders. b.Separate legal existence. c.Continuous life. d.Government regulation. 52.The two ways that a corporation can be classified by purpose are a.general and limited. b.profit and not-for-profit. c.state and federal. d.publicly held and privately held. 53.The two.
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10-1 Reporting and Analyzing Liabilities BRIEF Exercises Be. 251 Steiner Sales Company has the following selected accounts after posting adjusting entries: Accounts Payable$  65,000 Notes Payable, 3-month50,000 Accumulated Depreciation—Equipment14,000 Notes Payable, 5-year, 6%80,000 Payroll Tax Expense4,000 Interest Payable3,000 Mortgage Payable120,000 Sales Taxes Payable38,000 Instructions Prepare the current liability section of Steiner Sales Company's balance sheet, assuming $15,000 of the mortgage is payable next year. Be..
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11-1 Reporting and Analyzing Stockholders’ Equity Be. 221 Lindy Corporation has 1,000,000 authorized shares of $20 par value common stock. As of June 30, 2014, there were 600,000 shares issued and outstanding. On June 30, 2014, the board of directors declared a $0.50 per share cash dividend to be paid on August 1,.
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11-1 Reporting and Analyzing Stockholders’ Equity 61.Which of the following statements concerning taxation is accurate? a.Partnerships pay state income taxes but not federal income taxes. b.Corporations pay federal income taxes but not state income taxes. c.Corporations pay federal and state income taxes. d.Only the owners must pay taxes on corporate income. 62.Which of the following statements is.
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10-1 Reporting and Analyzing Liabilities Be. 258 On January 1, 2014, Hauke Corporation issued $900,000, 6%, 10-year bonds at face value. Interest is payable annually on January 1. Hauke Corporation has a calendar year end. Instructions Prepare all entries related to the bond issue for 2014. *Be. 259 Mintz Company issued $400,000, 10%, 10-year bonds on January.
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11-1 Reporting and Analyzing Stockholders’ Equity 81.If Pratt Company issues 5,000 shares of $5 par value common stock for $210,000, the account a.Common Stock will be credited for $185,000. b.Paid-in Capital in Excess of Par Value will be credited for $210,000. c.Paid-in Capital in Excess of Par Value will be credited for $235,000. d.Cash will be.
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10-1 Reporting and Analyzing Liabilities S-A E 300 Bonds are frequently issued at amounts greater or less than face value. Describe how the market rate of interest, relative to the contractual rate of interest, affects the selling price of bonds. S-A E 301 Bonds may be redeemed (retired) before maturity by the issuing corporation. Explain.
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11-1 Reporting and Analyzing Stockholders’ Equity 11.When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds. 12.As soon as a corporation is authorized to sell stock, an accounting journal entry should be made recording the total value.
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11-1 Reporting and Analyzing Stockholders’ Equity Be. 219 In its first year of operations, Martinez Corporation had the following transactions pertaining to its $10 par value preferred stock. Feb.1Issued 8,000 shares for cash at $24 per share. July1Issued 6,000 shares for cash at $25 per share. Instructions (a)Journalize the transactions. (b)Indicate the amount to be reported for (1).
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10-1 Reporting and Analyzing Liabilities S-A E 304(Ethics) Wishbone Company maintains two separate accounts payable computer systems. One is known to all the users, and is used to process payments to vendors. Employees enter the vendor code, or the name and address of new vendors, the amount, the account, and so on. The.
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10-1 Reporting and Analyzing Liabilities *Ex. 271 Renfro Company issued $300,000 of 8%, 10-year bonds at 102. Interest is paid annually, and the straight-line method is used for amortization. Assume that the market rate for similar investments is 7%. The bonds are issued on the date of the bonds. What amount was received for.
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10-1 Reporting and Analyzing Liabilities *Ex. 277 Moon Company issued $500,000, 10%, 5-year bonds on January 1, 2014, at 106. Interest is payable annually on January 1. Moon uses the effective-interest method of amortization and has a calendar year end and the bonds were issued for an effective interest rate of 8%. Instructions Prepare all.
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11-1 Reporting and Analyzing Stockholders’ Equity MULTIPLE CHOICE QUESTIONS 47.Under the corporate form of business organization a.a stockholder is personally liable for the debts of the corporation. b.stockholders’ acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation. c.the corporation’s life is stipulated in its charter. d.stockholders wishing to.
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11-1 Reporting and Analyzing Stockholders’ Equity BRIEF Exercises Be. 213 1.Name at least three advantages of a corporation. 2.Corporations acquire treasury stock for a variety of purposes. Name three reasons why a corporation may acquire treasury stock. Be. 214 Identify (by letter) each of the following characteristics as being an advantage or a disadvantage of the corporate.
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10-1 Reporting and Analyzing Liabilities 221.On January 1, Sewell Corporation issues $2,000,000, 5-year, 12% bonds at 96 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a a.              debit to Interest Expense, $120,000. b.              debit.
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11-1 Reporting and Analyzing Stockholders’ Equity 181.Racer Corporation’s December 31, 2014 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative,      40,000 shares authorized; 20,000 shares issued$     400,000 Common stock, $10 par value, 4,000,000 shares authorized;      2,600,000 shares issued, 2,560,000 shares outstanding26,000,000 Paid-in capital in excess of par value – preferred.
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11-1 Reporting and Analyzing Stockholders’ Equity 201.The following information pertains to Marsh Company. Assume that all balance sheet amounts represent average balance figures. Total asset$400,000 Stockholders’ equity—common 200,000 Total stockholders’ equity280,000 Sales120,000 Net income24,000 Number of shares of common stock8,000 Common dividends9,000 Preferred dividends 6,000 What is Marsh’s return on common stockholders’ equity? a.12%. b.9%. c.7.5%. d.6.4%. 202.Which of the following statements is true regarding corporate.
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10-1 Reporting and Analyzing Liabilities 231.On January 1, Thompson Corporation issued $3,000,000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $3,216,288. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is.
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11-1 Reporting and Analyzing Stockholders’ Equity Exercises Ex. 225 The corporate charter of Torres Corporation allows the issuance of a maximum of 4,000,000 shares of $1 par value common stock. During its first three years of operation, Torres issued 2,080,000 shares at $15 per share. It later acquired 80,000 of these shares as treasury.
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11-1 Reporting and Analyzing Stockholders’ Equity 31.A stock dividend does not affect the total amount of stockholders’ equity. 32.A stock split results in a transfer at market value from retained earnings to paid-in capital. 33.A 3-for-1 common stock split will increase total stockholders’ equity but reduce the par or stated value per share of.
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10-1 Reporting and Analyzing Liabilities IFRS QUESTIONS               1.Wittebury Corporation retires its £3,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $3,112,350. The entry to record the redemption will include a.a credit of £37,650 to Gain on.
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11-1 Reporting and Analyzing Stockholders’ Equity 171.The following selected amounts are available for Thomas Company. Retained earnings (beginning)$2,500 Net loss200 Cash dividends declared200 Stock dividends declared200 What is its ending Retained Earnings balance? a.$2,200. b.$2,300. c.$1,900. d.$2,100. 172.Hutchinson Company had retained earnings of $15,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant.
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11-1 Reporting and Analyzing Stockholders’ Equity 161.Identify the effect the declaration of a stock dividend has on the par value per share and book value per share. Par Value per ShareBook Value per Share a.IncreaseDecrease b.No effectIncrease c.DecreaseDecrease d.No effectDecrease 162.Which of the following show the proper effect of a stock split and a stock dividend? ItemStock SplitStock Dividend a.Total.
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11-1 Reporting and Analyzing Stockholders’ Equity CHAPTER 11 REPORTING AND ANALYZING STOCKHOLDERS’ EQUITY TRUE-FALSE STATEMENTS 1.A corporation is not an entity that is separate and distinct from its owners. 2.The liability of a stockholder is usually limited to the stockholder’s investment in the corporation. 3.The sale of shares in a corporation by one stockholder to another affects.
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11-1 Reporting and Analyzing Stockholders’ Equity 151.Brewer Inc. has 5,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $15,000 dividend in 2013. In 2014, $60,000.
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10-1 Reporting and Analyzing Liabilities Be. 254 Manuel Company had cash sales of $86,800 (including taxes) for the month of June. Sales are subject to 8.5% sales tax. Prepare the entry to record the sale. Be. 255 Mantle Publications publishes a golf magazine for women. The magazine sells for $4.00 a copy on the newsstand..
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10-1 Reporting and Analyzing Liabilities Ex. 263 On June 1, Huntley Company borrows $50,000 from the bank by signing a 60-day, 6%, interest-bearing note. Instructions Prepare the necessary entries below associated with the note payable on the books of Huntley Company. (a)Prepare the entry on June 1 when the note was issued. (b)Prepare any adjusting entries necessary.
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11-1 Reporting and Analyzing Stockholders’ Equity 111.Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders’ equity section, the effects of the transaction above will be reported a.entirely within the capital stock section. b.entirely within the additional paid-in capital section. c.under both the capital stock.
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10-1 Reporting and Analyzing Liabilities Ex. 266 During the month of March, Preston Company's employees earned wages of $90,000. Withholdings related to these wages were $6,885 for Social Security (FICA), $14,200 for federal income tax, $6,200 for state income tax, and $600 for union dues. The company incurred no cost related to these.
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10-1 Reporting and Analyzing Liabilities COMPLETION STATEMENTS               279.A current liability is a debt that can be expected to be paid within ____________ year(s) or the ______________, whichever is longer.               280.Liabilities are classified on the balance sheet as being _______________ liabilities or ______________ liabilities.               281.Obligations in written form are called ______________ and usually.
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11-1 Reporting and Analyzing Stockholders’ Equity 41.The Common Stock Distributable account is classified as a current liability. 42.Return on common stockholders’ equity is computed by dividing net income by ending stockholders’ equity. 43.The payout ratio is computed by dividing total cash dividends paid on common stock by retained earnings. *44.A liability arises when the board.
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