Rhodes Bakery
The balance sheet taken from the company’s 2015 10-K is provided below:
December 31
Assets: 2015 2014
Current Assets:
Cash $ 61,100 $54,000
Accounts Receivable 22,500 17,500
Inventory 8,500 7,000
Other Current Assets 6,500 5,500
Total Current Assets 98,600 84,000
Long-term Assets:
Property, Plant & Equipment, net 744,900 25,000
Intangible Assets 211,250 225,000
Total Assets $1,054,750 $334,000
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts Payable $ 5,500 $ 4,500
Interest Payable 500 500
Current Portion of Long-Term Debt 15,000 0
Income Tax Payable 18,500 23,000
Total Current Liabilities $ 39,500 28,000
Long-term Liabilities:
Notes Payable 246,250 15,000
Total Liabilities 285,750 43,000
Stockholders’ Equity
Common Stock 60,000 35,000
Additional Paid-in Capital 654,000 186,000
Retained Earnings 92,500 70,000
Treasury Stock (37,500) 0
Total Stockholders’ Equity 769,000 291,000
Total Liabilities and Stockholders’ Equity $1,054,750 $334,000
Refer to Rhodes Bakery. Prepare a common size balance sheet to be used in vertical
analysis.
A debit entry increases assets and revenue accounts.
Refer to B-There Transportation. Is the change in the current ratio favorable or not?
Explain.
The ____________________ basis of accounting requires that revenues be recorded in
the period they are earned rather than in the period they are received.
When reconciling a bank account, the company must prepare an adjusting entry for
deposits in transit.
____________________ is the quality of accounting information that allows a user to
compare two or more accounting periods for a single company.
Select the account to which each of the following costs would be debited. (Choices may
be used more than once.)
a. Land
b. Land Improvements
c. Buildings
d. Machinery and Equipment
e. An Expense Account
5, The transportation charges related to the acquisition costs of a new piece of
machinery.
6, The costs paid to clear land.
7, The annual painting costs of an office building.
8, The sales taxes paid related to a machine purchased.
9, The costs to pave a parking lot.
The number of shares issued minus the number of shares of treasury stock is
____________________ shares.
If the Income Summary account has a credit balance just prior to closing it to retained
earnings, the company must have incurred a net income for the year.
The ___________________ is a chronological record of all transactions entered into by
a business.
Identify which inventory costing method achieves the effect listed in the following items.
(Choices may be used more than once.)
a. FIFO method c. Average cost method
b. LIFO method d. Specific identification method
23. Prices are rising; profits are higher under this method.
24. Prices are rising; cost of goods sold is lower with this method.
25. Prices are rising; ending inventory is lower with this method.
26. Prices are rising; ending inventory best approximates replacement cost with this
method.
27. Prices are declining; gross margin is higher with this method.
28. Prices are declining; ending inventory is lower with this method.
29. Prices are declining; income taxes are higher with this method.
30. Prices are declining; ending inventory with this method falls between the amounts
for the other two methods.
An example of a current liability is a note payable that is due in 2 years.
Under a periodic inventory system, the ____________________ account accumulates
the cost of inventory acquired during the period.
The stronger the system of internal control, the higher the accuracy of the company’s
accounting records and financial reports.
10% Non-participating Preferred Stock, $10 par, 2,000 shares authorized,
1,000 shares issued $ 10,000
Common Stock, $1 par, 10,000 share authorized, 6,000 shares issued 6,000
Paid-in Capital in Excess of Par:
Preferred Stock 50,000
Common Stock 30,000
Total Contributed Capital 96,000
Retained Earnings 70,000
Less: Treasury Stock (100 common shares at cost) <1,300>
Total Stockholders’ Equity $164,700
This company has been in business for over ten years, but has paid no dividends for the
past two years, 2013 and 2014 due to a temporary decline in business. During the
current year, 2015, the company has net income of $30,000 and plans to pay a dividend.
Complete the table below indicating the amount of dividends that each class of
stockholder will receive under the following preferred stock dividend assumptions:
Total amount available Preferred Common
Dividend preference: for dividend dividend dividend
Cumulative $4,000
Noncumulative $4,000
Refer to Recovery Solutions, Inc. Perform DuPont analysis for 2015 and 2014, showing
all three components. Assume that total assets and total stockholders’ equity at June 30,
2013, were $1,250,000 and 969,000, respectively.
A lease is accounted for as an operating lease if the present value of the lease payments
is at least 90 percent of the fair value of the leased property.