Question 1

A company reported net income of $225,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

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Question 2

Scotsland Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.

Accepted Answer

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Question 3

Element Company had the following long-term available-for-sale securities in its portfolio at December 31 for each of the years listed.The year-end cost and fair values for its portfolio follow.Beginning with Year 1,prepare the appropriate journal entry to record each year-end market adjustment for these securities.

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Question 4

On October 31,Augustas Co.received cash dividends of $0.15 per share from its investment in Lamb Corp.'s common stock.Augustas owned 1,200 shares of Lamb Corp.'s stock on October 31.The investment is considered available-for-sale.Prepare the investor's journal entry to record the receipt of the cash dividends.

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Question 5

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

Accepted Answer

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Question 6

A company paid $600,000 for 10% bonds with a par value of $600,000 on September 1.The bonds pay 5% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1)Bonds purchased on September 1.
(2)Year-end adjusting entry,December 31.
(3)Receipt of semiannual interest March 1.
(4)Redemption of the bonds at maturity on August 31.

Accepted Answer

The answer of A company paid $600,000 for 10% bonds...

Question 7

A company had net income of $86,000 in Year 1 and $118,000 in Year 2.Its net sales were $640,000 in Year 1 and $611,000 in Year 2.Its average total assets in Year 1 were $1,670,000 and $1,712,000 in Year 2.Calculate the profit margin,total asset turnover and return on total assets for both years.Comment on the results.

Accepted Answer

The answer of A company had net income of $86,000...

Question 8

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $835,000 in Year 1 and $918,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1and Year 2.Comment on the results.

Accepted Answer

The answer of A company reported net income for Year...

Question 9

Hubbard Company had the following trading securities in its portfolio at December 31.The Fair Value Adjustment-Trading account had a balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

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The answer of Hubbard Company had the following trading securities...

Question 10

On May 1 of the current year,a company paid $200,000 to purchase 7%,10-year bonds with a par value of $200,000;interest is paid semiannually on May 1 and November 1.The company intends to hold the bonds until they mature.Prepare the journal entries to record (1)the bond purchase, (2)the receipt of the first semiannual interest payment on September 1 of the current year, (3)the accrual of interest for year-end December 31,and (4)the receipt of the second semiannual payment on May 1.

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Question 11

On January 2,Froxel Company purchased 10,000 shares of Sandia Corp.common stock at $19 per share plus a $3,000 commission.This represents 30% of Sandia Corp.'s outstanding stock.On August 6,Sandia Corp.declared and paid cash dividends of $1.75 per share,and on December 31 it reported net income of $150,000.Prepare the necessary entries for Froxel to account for these transactions and events.

Accepted Answer

The answer of On January 2,Froxel Company purchased 10,000 shares...

Question 12

In the current year,Largo Co.purchased bonds of MacDermott Corp.with a cost of $125,000 and a market value of $127,000.Largo also purchased 1,500 shares of Armistead common stock with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.

Accepted Answer

The answer of In the current year,Largo Co.purchased bonds of...

Question 13

On May 1 of the current year,a company paid $200,000 cash to purchase 6%,10-year bonds with a par value of $200,000;interest is paid semiannually each May 1 and November 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the receipt of the first semiannual interest payment on November 1.

Accepted Answer

The answer of On May 1 of the current year,a...

Question 14

Mire Corporation had the following transactions involving investments in trading securities during the year.Prior to these transactions,Mire had never had any investments in trading securities.Prepare the required general journal entries to record these transactions.

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The answer of Mire Corporation had the following transactions involving...

Question 15

A company had net income of $45,000,net sales of $390,000,and average total assets of $450,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company had net income of $45,000,net...

Question 16

In the current year,Logic Co.purchased bonds of Waterford Co.with a cost of $125,000 and a year-end fair value of $123,700.Logic also purchased 1,500 shares of Jasper Co.common stock with a cost of $25,000 and a year-end fair value of $26,100.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of its December 31 year-end.

Accepted Answer

The answer of In the current year,Logic Co.purchased bonds of...

Question 17

Weston Company had the following long-term available-for-sale securities in its portfolio at December 31,Year 1.Weston had several long-term investment transactions during the next year.After analyzing the effects of each transaction, (1)determine the amount Weston should report on its December 31,Year 1 balance sheet for its long-term investments in available-for-sale securities, (2)determine the amount Weston should report on its December 31,Year 2 balance sheet for its long-term investments in available-for-sale securities, (3)prepare the necessary adjusting entry to record the fair value adjustment at December 31,Year 2.

Accepted Answer

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Question 18

Washington Corp.held 1,500 of Vashon Company common stock with a cost of $74,387.These shares were classified as a Long-Term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record Washington's sale.

Accepted Answer

The answer of Washington Corp.held 1,500 of Vashon Company common...

Question 19

Barzetti had no investments prior to the current year.It had the following transactions involving available-for-sale and held-to-maturity securities during the year.The stock purchases are considered short-term available-for-sale securities.Prepare Barzetti's journal entries to record the transactions and events associated with the investment purchases.

Accepted Answer

The answer of Barzetti had no investments prior to the...

Question 20

On May 1 of the current year,a company paid $200,000 cash to purchase 6%,10-year bonds with a par value of $200,000;interest is paid semiannually each May 1 and November 1.The company intends to hold these bonds until they mature.Prepare the journal entry for the accrual of interest for the year-end December 31.

Accepted Answer

The answer of On May 1 of the current year,a...

Quiz 15: Investments and International Operations

A company reported net income of $225,000,net sales of $2,500,000,and average total assets of $2,100,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

Scotsland Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.

Landers,Inc. ,held 1,500 of Shipman Company common stock with a cost of $36,900.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $42,100.Prepare Lander's journal entry to record this sale.

Hubbard Company had the following trading securities in its portfolio at December 31.The Fair Value Adjustment-Trading account had a balance of zero prior to year-end adjustment.Prepare the appropriate adjusting journal entry.

Mire Corporation had the following transactions involving investments in trading securities during the year.Prior to these transactions,Mire had never had any investments in trading securities.Prepare the required general journal entries to record these transactions.

A company had net income of $45,000,net sales of $390,000,and average total assets of $450,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Washington Corp.held 1,500 of Vashon Company common stock with a cost of $74,387.These shares were classified as a Long-Term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record Washington's sale.