Restricted earnings are usually disclosed in the footnotes to the financial statements, but
may sometimes be disclosed in a reserve account in the equity section of the balance
sheet.
A contra account called ____________________ is used to depreciate property, plant,
and equipment.
Refer to Rhodes Bakery. Calculate the following stockholder ratios for 2015 and 2014:
Earnings per Share, Return on Common Equity, Dividend Yield, Dividend Payout, Total
Payout, and Stock Repurchase Payout Ratios. Round your answers to two decimal
places, then comment on the company’s stockholder performance.
Additional information is available below:
2015 2014
Net Income $24,000 $28,750
Dividends Paid $ 1,500 $ 875
Average number of shares outstanding 22,812 17,500
Closing market price per share $ 24.00 $ 18.00
The company had no preferred stock throughout the period 2013 through 2015. At
December 31, 2013, total stockholders’ equity was $287,500.
The weighted average cost is calculated by adding the units’ costs from each purchase
and then dividing by the number of purchases.
The following are selected data from a large company’s financial statements:
Identify the steps in the accounting cycle that must have been completed prior to
determining these amounts.
The cash ratio is calculated by dividing current liabilities by the total of cash and
marketable securities.
White Appliances
On August 1, 2013, White Appliances purchased 75 refrigerators for $45,000 cash and
also paid $1,500 transportation costs related to this purchase. On the same date, White
purchased 100 dishwashers for $20,000 on credit; however, the seller paid the $1,200
freight. The credit terms for the dishwashers were 2/10, n/30. On August 3rd, White
determined that 5 of the refrigerators were defective, so they were returned to the seller.
White paid for the dishwashers on August 9th. On August 10th, White purchased 90
microwave ovens for $9,000 on credit with terms 1/10, n/30. The seller paid the freight.
White paid for the microwave ovens on August 21st.
Refer to the information presented for White Appliances. Prepare all of the company’s
journal entries for August assuming the use of a perpetual inventory system.
A potential advantage of debt financing over equity financing is that it fixes the amount
of compensation to the lender.
If the balance of wages payable increases during the year, then the
____________________ for the period will be greater than the actual cash wages paid
in the period.
When there is proper segregation of duties, the likelihood of fraud is reduced so that an
employee attempting to carry out a fraudulent scheme would have to work in
____________________ with another employee.
Current liabilities require a transfer of assets or performance of services within the
longer of ____________________ or one operating cycle.
If the beginning balance in Accounts Receivable is $11,000 and the ending balance is
$9,000, then credit sales must have exceeded collections on account.
Refer to Maritime Marine Services. What was the amount of cash dividends paid during
2014?
When true no-par stock is sold for cash, the amount credited to the stock account is the
par value times the number of shares sold.
The method of recording bad debts that results in a bad debt expense before the actual
default is the ____________________.
During April, Downtown Iron Works engaged in the following transactions involving it
petty cash fund:
Date Description
Amount
April 1 Established the petty cash fund by issuing a check to the fund’s
custodian. $250
April 4 The custodian paid for freight charges on new equipment
125
April 13 The custodian paid for postage services on the mailing of blueprints.
50
April 21 The custodian paid for office supplies.
25
April 25 The custodian requested reimbursement of the petty cash expenditures
during the month and receives a check to replenish the
fund. ?
Prepare the journal entries necessary to record the company’s petty cash transactions.