Chapter 02 – Investing and Financing Decisions and the Balance Sheet
84. The Pioneer Company has provided the following account balances:
Cash $38,000;
Short-term investments $4,000;
Accounts receivable $6,000;
Inventory $48,000;
Long-term notes receivable $2,000;
Equipment $96,000;
Factory Building $180,000;
Intangible assets $6,000;
Accounts payable $30,000;
Accrued liabilities payable $4,000;
Short-term notes payable $14,000;
Long-term notes payable $92,000;
Contributed capital $180,000;
Retained earnings $60,000.
What are Pioneer’s total current assets?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
85. The Pioneer Company has provided the following account balances:
Cash $38,000;
Short-term investments $4,000;
Accounts receivable $6,000;
Inventory $48,000;
Long-term notes receivable $2,000;
Equipment $96,000;
Factory Building $180,000;
Intangible assets $6,000;
Accounts payable $30,000;
Accrued liabilities payable $4,000;
Short-term notes payable $14,000;
Long-term notes payable $92,000;
Contributed capital $180,000;
Retained earnings $60,000.
What are Pioneer’s total current liabilities?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
86. At the beginning of April, Warren Corporation’s assets totaled $240,000 and liabilities
totaled $60,000. During April the following summarized transactions occurred:
Additional shares of stock were sold for $20,000 cash.
A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000
long-term note payable.
Short-term investments costing $9,000 were purchased using cash.
$10,000 was lent to an employee; the employee signed a six-month note in exchange for the
loan.
How much are Warren’s total assets at the end of April?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
87. At the beginning of April, Warren Corporation’s assets totaled $240,000 and liabilities
totaled $60,000. During April the following summarized transactions occurred:
Additional shares of stock were sold for $20,000 cash.
A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000
long-term note payable.
Short-term investments costing $9,000 were purchased using cash.
$10,000 was lent to an employee; the employee signed a six-month note in exchange for the
loan.
How much are Warren’s total liabilities at the end of April?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
88. Tiger Company’s stockholders’ equity at the beginning of the year was $175,000. During
the year Tiger reported the following:
Net income of $79,000.
Dividend declarations totaling $17,000.
Issued stock to stockholders in exchange for $42,000 cash.
Stockholders sold some of their stock to other stockholders for $11,000 cash.
What is Tiger’s stockholders’ equity at the end of the year?
89. Which of the following transactions will not change a company’s total stockholders’
equity?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
90. Which of the following transactions would create a cash inflow from a financing activity?
91. Which of the following best describe financing activities?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
92. Which of the following would cause a cash outflow from investing activities?
93. Which of the following would result when a company borrows cash and signs a note
payable due in two years?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
94. Which of the following would result when a company sells additional shares of stock for
cash?
95. Which of the following would result when a company purchases a factory building using
cash?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
96. Which of the following would result when a company lends cash to a franchisee in
exchange for a ten-month note receivable?
97. Which of the following would result when a company pays a previously declared cash
dividend?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
98. Which of the following would be classified as financing cash flows on a cash flow
statement?
1. Paying cash dividends.
2. Lending cash to others.
3. Issuing stock for cash.
4. Purchasing long-term assets for cash.
5. Repurchasing stock with cash.
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
99. Which of the following would be classified as investing cash flows on a cash flow
statement?
1. Acquired a building by signing a long-term mortgage payable.
2. Lending cash to others.
3. Issuing stock for cash.
4. Purchasing long-term assets for cash.
5. Selling stock investments for cash.
100. Which of the following statements is false?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
101. Why is the continuity assumption so important for balance sheet reporting?
102. Why is the separate-entity assumption so important for balance sheet reporting?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
103. Why is the historical cost principle so important for balance sheet reporting?
Chapter 02 – Investing and Financing Decisions and the Balance Sheet
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104. Complete the following schedule for Red Eye Company.
Chapter 02 – Investing and Financing Decisions and the Balance Sheet