Match the following bond and long-term liability related terms to the appropriate
definition.
a. Long-term liability
b. Face value
c. Debenture bonds
d. Serial bonds
e. Callable bonds
f. Face rate of interest
g. Market rate of interest
h. Bond issue price
i. Premium
j. Discount
k. Effective interest method of amortization
l. Carrying value
m. Gain or loss on redemption
The total of the present value of the cash flows produced by a bond. It is calculated as
the present value of the annuity of interest payments plus the present value of the
principal.
Park, Inc. purchased merchandise from Jay Zee Music Company on June 5, 2015. The
goods were shipped the same day. The merchandise’s selling price was $15,000. The
credit terms were 1/10, n/30. The shipping terms were FOB shipping point. Park
received the merchandise on June 10, 2015. Park paid the amount due on June 13, 2015.
When did title to the merchandise transfer from Jay Zee Music Company to Park?
a. June 5, 2015
b. June 10, 2015
c. June 13, 2015
d. Cannot be determined from the information provided
Amortization of bond premium results in a(n)
a. decrease of the carrying value of bonds.
b. no change in stockholders’ equity.
c. increase in interest expense.
d. decrease in the cash account.
The denominator of a return ratio will be some measure of the company’s income for
the period.
a. True
b. False
Use the following information that was obtained from the 2016 and 2015 financial
statements of Lake Company, River Corporation, and Ocean Company to answer the
questions that follow.
REQUIRED: Compare the three companies and answer the following:A) Compute the
accounts receivable turnover ratio for each company for 2016. B) Which company
appears to have the best liquidity position based solely on the accounts receivable
turnover? Explain.
For what reason would a company buy 10% of the common stock of a second
company?
a. The company has idle cash and wishes to have a higher return than that available
from temporary money market investments.
b. The company wishes to insure a steady source of goods from the second company.
c. The company wishes to prepare consolidated financial statements.
d. More than one of the above is correct.
Balance sheet accounts are called real accounts.
a. True
b. False
The issuance of stock is reported as a financing activity.
a. True
b. False
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations. How much
would have to be deposited in a savings account earning 6%, so that equal annual
withdrawals of $200 can be made at the end of each of 10 years? The balance at the end
of the last year would be zero.
a. $ 528
b. $1,472
c. $2,000
d. $2,636
Norwood, Inc. Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an
estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of
operation. The crane was purchased on January 1, 2015 and was used 2,700 hours in
2015 and 2,600 hours in 2016. Refer to the information about Norwood, Inc. If
Norwood uses the units-of-production method, what is the depreciation rate per hour for
the equipment?
a. $4.00
b. $5.00
c. $6.00
d. $7.50
Twin Cities Corp. had sales during the year of $15,000,000 and an average accounts
receivable of $5,000,000. Its accounts receivable turnover ratio is 0.33 times.
a. True
b. False
Pinecrest Company
Use the selected data from Pinecrest Company’s financial statements to answer the
following question.
Refer to the data for Pinecrest Company.The current ratio for 2016 is
a. 0.60 to 1
b. 0.99 to 1
c. 1.34 to 1
d. 1.68 to 1
Choose from the following list of account titles the one that most accurately fits the des
cription of that account or is an example of that account.An account title may be used m
ore than once or not at all.
a. Cash
b. Prepaid Asset
c. Investments
d. Taxes Payable
e. Preferred Stock
f. Accounts Receivable
g. Land
h. Accounts Payable
i. Retained Earnings
j. Notes Receivable
k. Buildings
l. Notes Payable
m. Common Stock
A plot of land held for speculation
Select the letter of the term each statement best describes.
a. authorized shares
b. issued shares
c. outstanding shares
d. par value
e. additional paid-in capital
f. retained earnings
g. cumulative feature
h. participating feature
i. callable stock
j. treasury stock
k. retirement of stock
l. dividend payout ratio
m. stock dividend
n. stock split
o. market value per share
p. convertible stock
q. book value per share
The number of shares sold or distributed to stockholders.
Norwood, Inc. Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an
estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of
operation. The crane was purchased on January 1, 2015 and was used 2,700 hours in
2015 and 2,600 hours in 2016. Refer to the information about Norwood, Inc. If
Norwood uses the double-declining-balance depreciation method, what amount is the
depreciation expense for 2016?
a. $14,063
b. $15,000
c. $18,750
d. $20,000
The cash flow adequacy ratio is defined as:
a. True
b. False
Scenic View Foods Corporation The following is the consolidated statements of income
for Scenic View Foods Corporation for the years ending December 31, 2015 and 2016
Refer to the consolidated statements of income for Scenic View Foods Corporation.
Fill in the table shown below indicating the period of time over which each intangible
asset should be amortized, and indicate the amount of amortization expense that should
be reported for 2013.
Select the best answer from the list below to complete statements 131-141 that follow.
Net income that has been earned by the corporation but not paid out as dividends are
______________________________.
Ware Company has a return on assets of 15% and a return on common stockholders’
equity of 10%. John Ware, the president of the company, has asked you to explain the
reason for this difference. What causes the difference? How is the concept of financial
leverage involved?
Review the consolidated balance sheets of Backkus Metal Company. REQUIRED:
(1) Which long-term liability would also be listed in the short-term liability section?
Why? (2) What percent of the total liabilities for 2015 and 2014 are long-term
liabilities? What implication does this have?
What importance is placed on a company’s stock price in the ratio analysis of a
company? Explain.
Based upon the following data, determine the cost of merchandise sold for April.
Cumberland City Consultants started business on January 1, 2015, and immediately
purchased $1,000 of supplies to use in the business. At the end of the month, 25 percent
of the supplies remains unpaid and 20% are still on hand. What amounts should appear
on the financial statements for January, 2015?