Question 1

Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.

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Question 2

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% 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 1,2012.
(2)Year-end adjusting entry,December 31,2012.
(3)Receipt of semiannual interest March 1,2013.
(4)Redemption of the bonds at maturity on August 31,2019.

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Question 3

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

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Question 4

On April 1 of the current year,a company paid $150,000 cash to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the purchase of the bond.

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Question 5

Identify the three types of classifications for noninfluential investments in securities.

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Question 6

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

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Question 7

Haladam Company had the following transactions relating to investments in trading securities during the year.Prepare the required general journal entries for these transactions.
 $\begin{array}{cl}
\text{May 4} & \text{Haladam purchased 600 shares of Cob Company stock at \$ 120 per share plus a \$ 750}\
&\text{brokerage fee.}\
\text{July 1}& \text{Haladam received a \$ 2.50 per share cash dividend on the Cob Company stock.}\
\text{Sept. 15} &\text{Sold 300 shares of the Cob Company stock for \$ 125 per share, less a \$ 450}\ 
&\text{brokerage fee.}\
\text{Dec. 31}& \text{The market value of the Cob Company stock (the only investment that Haladam}\
&\text{owns) is \$124 per share. The balance of the Market Adjustment - Trading a zero}\ 
&\text{balance prior to adjustment.}
\end{array}$

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Question 8

Explain how to record the sale of trading securities.

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Question 9

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

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Question 10

A company reported net income for 2012 of $98,000 and $106,000 in 2013.It also reported net sales of $735,000 in 2012 and $798,000 in 2013.The company's average total assets in 2012 were $1,850,000 and $1,720,000 in 2013.Calculate this company's profit margin,total asset turnover,and return on total assets for 2012 and 2013.Comment on the results.

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Question 11

A company reported net income of $275,000,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.

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Question 12

Define the foreign exchange rate between two currencies.Explain its effect on business transactions conducted in a foreign currency.

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Question 13

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1.The company intends to hold the bonds until they mature.Prepare the journal entry to record the receipt of the first semiannual interest payment on October 1 of the current year.

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Question 14

A company had net income of $450,000 in 2012 and $620,000 in 2013.The company had average total assets of $2,500,000 in 2012 and $3,000,000 in 2013.Calculate the return on total assets for 2012 and 2013.Comment on the results.

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Question 15

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to recognize accrued interest as of December 31 of the current year.

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Question 16

On April 1 of the current year,a company paid $150,000 to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually on October 1 and April 1.The company intends to hold the bonds until they mature.Prepare the journal entry to record the receipt of the semiannual interest payment on April 1 of the following year.

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Question 17

Explain how equity securities having significant influence are accounted for and reported in the financial statements.Include a discussion of the criterion for these securities in terms of an investee's voting stock.

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Question 18

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

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Question 19

Define the return on total assets and explain how it is used to measure a company's financial performance.

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Question 20

A company had net income of $76,000 in 2012 and $88,000 in 2013.Its net sales were $640,000 in 2012 and $611,000 in 2013.Its average total assets in 2012 were $670,000 and $712,000 in 2013.Calculate the profit margin,total asset turnover,and return on total assets for both years.Comment on the results.

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Quiz 27: Investments and International Operations

Explain how available-for-sale debt and equity securities are accounted for at and after acquisition and how they are reported in financial statements.

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

On April 1 of the current year,a company paid $150,000 cash to purchase 7%,10-year bonds that had a par value of $150,000 and paid interest semiannually each April 1 and October 1.The company intends to hold these bonds until they mature.Prepare the journal entry to record the purchase of the bond.

Identify the three types of classifications for noninfluential investments in securities.

A company reported net income of $100,000 and average total assets of $425,000.Calculate its return on total assets.

Explain how to record the sale of trading securities.

A company had net income of $45,000,net sales of $390,000,and average total assets of $250,000 for the current year.Calculate this company's profit margin,total asset turnover,and return on total assets.

A company reported net income of $275,000,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.

Define the foreign exchange rate between two currencies.Explain its effect on business transactions conducted in a foreign currency.

A company had net income of $450,000 in 2012 and $620,000 in 2013.The company had average total assets of $2,500,000 in 2012 and $3,000,000 in 2013.Calculate the return on total assets for 2012 and 2013.Comment on the results.

Explain how equity securities having significant influence are accounted for and reported in the financial statements.Include a discussion of the criterion for these securities in terms of an investee's voting stock.

Explain how held-to-maturity debt securities are accounted for at and after acquisition and how they are reported in the financial statements.

Define the return on total assets and explain how it is used to measure a company's financial performance.