Question 1

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.

Accepted Answer

The answer of On April 1 of the current year,...

Question 2

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

Accepted Answer

The answer of A company reported net income of $100,000...

Question 3

Hector Corp. purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash. This purchase is considered a long-term available-for-sale investment by Hector. Prepare Hector's journal entry to record the purchase.

Accepted Answer

The answer of Hector Corp. purchased 1,000 shares of Landmark...

Question 4

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.

Accepted Answer

The answer of Explain how equity securities having significant influence...

Question 5

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 Froxel Company must make to account for these transactions and events.

Accepted Answer

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

Question 6

On October 31, Mayfair Co. received cash dividends of $0.15 per share from its investment in Carter Corp.'s common stock. Mayfair owned 1,200 shares of Carter 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.

Accepted Answer

The answer of On October 31, Mayfair Co. received cash...

Question 7

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, 2009.
(2) Year-end adjusting entry, December 31, 2009.
(3) Receipt of semiannual interest March 1, 2010.
(4) Redemption of the bonds at maturity on August 31, 2016.

Accepted Answer

The answer of A company paid $500,000 for 12% bonds...

Question 8

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.

Accepted Answer

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

Question 9

Columbia Corp. held 1,500 of Vianco 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 this sale.

Accepted Answer

The answer of Columbia Corp. held 1,500 of Vianco common...

Question 10

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.

Accepted Answer

The answer of On April 1 of the current year,...

Question 11

Marina, Inc., held 1,500 of Navia 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 the necessary journal entry to record this sale.

Accepted Answer

The answer of Marina, Inc., held 1,500 of Navia common...

Question 12

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

Accepted Answer

The answer of Explain how transactions (both sales and purchases)...

Question 13

Haladam 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

The answer of Haladam Company had the following transactions relating...

Question 14

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.

Accepted Answer

The answer of On April 1 of the current year,...

Question 15

Detalo Co. held bonds of Schooner Corp. with a cost of $125,000 and a market value of $127,000. Detalo also held 1,500 shares of Tranco 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 Detalo Co. held bonds of Schooner Corp....

Question 16

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.

Accepted Answer

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

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

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.

Accepted Answer

The answer of On April 1 of the current year,...

Question 20

A company had net income of $450,000 in 2009 and $620,000 in 2010. The company had average total assets of $2,500,000 in 2009 and $3,000,000 in 2010. Calculate the return on total assets for 2009 and 2010. Comment on the results.

Accepted Answer

The answer of A company had net income of $450,000...

Quiz 25: Investments and International Operations

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

Hector Corp. purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash. This purchase is considered a long-term available-for-sale investment by Hector. Prepare Hector's journal entry to record the purchase.

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.

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.

Columbia Corp. held 1,500 of Vianco 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 this sale.

Marina, Inc., held 1,500 of Navia 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 the necessary journal entry to record this sale.

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

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

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.

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

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

A company had net income of $450,000 in 2009 and $620,000 in 2010. The company had average total assets of $2,500,000 in 2009 and $3,000,000 in 2010. Calculate the return on total assets for 2009 and 2010. Comment on the results.