Purchased a piano (inventory) for $72,000, signing a six-month, 4% ...

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Purchased a piano (inventory) for $72,000, signing a six-month, 4% note payable. May 31 Borrowed $85,000 on a 5% note payable that calls for annual installment payments of $17,000 principal plus interest. Record the short-term note payable in a separate account from the long-term note payable. Sep 3 Paid the six-month, 4% note at maturity. Dec 31 Accrued warranty expense, which is estimated at 2% of sales of $214,000. 31 Accrued interest on the outstanding note payable. 2015 May 31 Paid the first installment and interest for one year on the outstanding note payable. Requirement 1. Record the transactions in Concerto Music Company's journal. Explanations are not required. P9-76B. (Learning Objectives 1, 2: Record bond transactions (at par); report bonds payable on the balance sheet) The board of directors of Cable Plus authorizes the issue of $7,000,000 of 6%, 20-year bonds payable. The semiannual interest dates are May 31 and November 30. The bonds are issued on May 31, 2014, at par. Requirements 1. Journalize the following transactions: a. Issuance of half of the bonds on May 31, 2014 b. Payment of interest on November 30, 2014 c. Accrual of interest on December 31, 2014 d. Payment of interest on May 31, 2015 2. Report interest payable and bonds payable as they would appear on the Cable Plus balance sheet at December 31, 2014. The following accounts and related balances of Hunt Designers, Inc., as of December 31, 2014, are arranged in no particular order: Cash. $53,000 Interest expense. $ 16,200 Accounts receivable, net 27,000 Property, plant, and Paid-in capital in excess equipment, net 355,000 of par-common 75,600 Common stock, $2 par, Accrued liabilities 25,000 1,250,000 shares authorized, Long-term note payable 95,000 118,000 shares issued. 236,000 Inventory. 98,000 Prepaid expenses 14,000 Dividends payable 6,000 Common stockholders' Retained earnings. ? equity, December 31, 2013 233,000 Accounts payable 130,000 Net income. 71,000 Trademarks, net 3,000 Total assets, Goodwill 18,000 December 31, 2013 495,000 Treasury stock, common, 8,000 shares at cost. 25,000 Net sales. 800,000 Requirements 1. Prepare Hunt's classified balance sheet in the account format at December 31, 2014. 2. Use DuPont Analysis to compute rate of return on total assets and rate of return on com- mon stockholders' equity for the year ended December 31, 2014. 3. Do these rates of return suggest strength or weakness? Give your reason. What additional information might help you make your decision? share; evaluate quality of earnings) The following information was taken from the records of Midler Cosmetics, Inc., at December 31, 2014: Prior-period adjustment-net of taxes Dividends on common stock $37,000 debit to Retained Earnings $ 9,300 Interest expense. 25,000 Income tax expense (saving): Gain on lawsuit settlement 10,400 Continuing operations 35,950 Dividend revenue 16,000 Income from discontinued Treasury stock, common operations. 6,100 (5,000 shares at cost) 15,000 Extraordinary loss (4,300) General expenses 81,000 Loss on sale of plant assets 15,000 Sales revenue 628,000 Income from discontinued Retained earnings, beginning, operations. 20,000 as originally reported 202,000 Preferred stock, 6%, $30 par, Selling expenses. 93,000 1,000 shares issued 30,000 Common stock, no par, Extraordinary loss 14,000 36,000 shares authorized Cost of goods sold. 314,200 and issued 390,000 Requirements 1. Using the End-of-Chapter Summary Problem (pages 637-638) as an example, prepare Midler Cosmetics' single-step income statement, which lists all revenues together and all expenses together, for the fiscal year ended December 31, 2014. Include earnings-per-share data. For purposes of earnings per share, assume dividends have been declared on preferred stock as of December. 2. Evaluate income for the year ended December 31, 2014. Midler's top managers hoped to earn income from continuing operations equal to 16% of sales. P11-57B. (Learning Objective 1: Use income data to make an investment decision) Midler Cosmetics in Problem P11-55B holds significant promise for carving a niche in its industry. A group of Irish investors is considering purchasing the company's outstanding common stock. Midler's stock is currently selling Go to page 657 hare. A Better Life Magazine story predicted the company's income is bound to grow. It appears that Midler can carn at least its current level of income for the indefinite future. Based on this information, the investors think that an appropriate investment capitalization rate for estimat- ing the value of Midler's common stock is 7%. How much will this belief lead the investors to offer for Midler Cosmetics? Will Midler's existing stockholders be likely to accept this offer? P12-69B. (Learning Objectives 2, 3: Prepare the statement of cash flows method) Watson Software Corp. has assembled the following data for the year ended December 31, 2014: A1 $ A B c 1 December 31, 2 2014 2013 3 Current Accounts: 4 Current assets: 5 Cash and cash equivalents S 100,700 $ 7,800 6 Accounts receivable 52,900 64,700 7 Inventories 39,000 68,000 8 Prepaid expenses 3,000 2,200 9 Current liabilities 10 Accounts payable 62,100 55,400 11 Income tax payable 18,400 16,300 12 Accrued liabilities 5,500 7,000 13 Transaction Data for 2014: Acquisition of land by issuing Purchase of treasury stock $10,900 long-term note payable $163,000 Gain on sale of equipment. 8,000 Stock dividends 40,100 Payment of cash dividends 19,000 Collection of loan. 25,600 Issuance of long-term note Depreciation expense 19,000 payable to borrow cash $0,600 Purchase of building Net income. 67,000 with cash 116,000 Issuance of common stock Retirement of bonds payable for cash 55,000 by issuing common stock 80,000 Proceeds from sale of Purchase of long-term equipment 12,900 investment with cash. 35,200 Amortization expense. 4,600 Requirement 1. Prepare Watson Software Corp.'s statement of cash flows using the indirect method to report operating activities. Include an accompanying schedule of noncash investing and financing activities. P13-58B. (Learning Objective 5: Compute effects of business transactions on selected ratios) Finan- cial statement data of Harper Engineering include the following items: Cash $ 30,000 Accounts payable $107,000 Short-term investments 32,000 Accrued liabilities 31,000 Accounts receivable, net 86,000 Long-term notes payable 163,000 Inventories 147,000 Other long-term liabilities 31,000 Prepaid expenses 5,000 Net income. 91,000 Total assets 673,000 Number of common Short-term notes payable. 48,000 shares outstanding $0,000 Requirements 1. Compute Harper's current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places. 2. Compute the three ratios after evaluating the effect of each transaction that follows. Con- sider each transaction separately. a. Borrowed $160,000 on a long-term note payable b. On January 1, issued 18,000 shares of common stock, receiving cash of $308,000 c. Paid short-term notes payable, $30,000 d. Purchased merchandise of $84,000 on account, debiting Inventory c. Received cash on account, $24,000 P13-60B. (Learning Objectives 5, 6: Use ratios to decide between two stack investments; measure economic value added) Assume that you are considering purchasing stock as an investment. You have narrowed the choice to BuyHere.com and EasySales Stores and have assembled the following data. Selected income statement data for current year: BuyHere.com EasySales Stores Net sales (all on credit). $601,000 $523,000 Cost of goods sold. 455,000 382,000 Income from operations 95,000 76,000 Interest expenic - 11,000 Net income 68,000 39,000 Selected balance-sheet and market price data at the end of the current year: BuyHere.com EasySales Stores Current assets Cash $ 31,000 $ 36,000 Short-term investments 7,000 11,000 Current receivables, net 182,000 165,000 Inventories 208,000 184,000 Prepaid expenses 15,000 14,000 Total current assets 443,000 410,000 Total 984,000 927,000 Total current liabilities 368,000 332,000 Total liabilities 665,000 710,000 Preferred streck: 6%, $100 par 20,000 Common stock, $1 par (150,000 shares). 150,000 $5 par (10,000 shares). 50,000 Total stockholders' equity 319,000 217,000 Market price per share of common stock $ 4.95 $ 64.26 Selected balance-sheet data at the beginning of the current year: BuyHere.com EasySales Stores Balance sheet: Carrent mocivables, net $144,000 $192,000 Inventories 204,000 198,000 Total assets $41,000 912,000 Long-term debt - 307,000 Prefetred stock, 6%, $100 par 20,000 Common stock, 51 par 1150,000 shares). 150,000 $5 par (10,000 shares) 50,000 Total stnckholders' equity 263,000 217,000 ©2008-2021 24houran Your strategy is to invest in companies that have low price-earnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your deci- sion depends on the results of ratio analysis. Requirements 1. Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy. a. Quick (acid-test) ratio b. Inventory turnover c. Days' sales in average receivables d. Debt ratio e. Times-interest-carned ratio f. Return on common stockholders' equity g. Earnings per share of common stock h. Price-earnings ratio 2. Compute each company's economic-value-added (EVA®) measure and determine whether the companies' EVA³s confirm or alter your investment decision. Each company's cost of capital is 9%

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