ACCT 221 7380 Principles of Accounting 2:
221 Exam 1 Ch 14-18
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Question 1:
- Oriole Corporation has 10,000 shares of 9%, $100 par value, cumulative preferred stock outstanding at December 31, 2022. No dividends were declared in 2020 or 2021. If M. Oriole wants to pay $440,000 of dividends in 2022, what amount of dividends will common stockholders receive?
Amount of dividend $
QUESTION 2.
For the year ending December 31, 2022, Lily Inc. reports net income $132,000 and cash dividends $81,000.
Determine the balance in retained earnings at December 31, assuming the balance in retained earnings on January 1, 2022, was $216,000.
Balance in retained earnings $
QUESTION 3:
On January 1, 2022, Oriole Corporation had $1,480,000 of common stock outstanding that was issued at par. It also had retained earnings of $742,000. The company issued 40,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year.
Journalize the declaration of a 16% stock dividend on December 10, 2022, for the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter O for the amounts.)
- Par value is $10, and market price is $18.
b.
Par value is $5, and market price is $21.
Format Needed:
No. Account Titles and Explanation Dr Cr
a.
b.
Question 4:
On January 1, 2022, Coronado Corporation purchased 4,600 shares of treasury stock. Other information regarding Coronado Corporation is provided as follows.
2021 2022
Net income
Dividends on preferred stock
Dividends on common stock
$92,000 $101,200
$27,600 $27,600
$18,400 $23,000
Weighted-average number of common shares outstanding
44,000
39,400
Common stockholders’ equity beginning of year
Common stockholders’ equity end of year
$552,000 $690,000
$690,000 $763,600
(a) Compute earnings per share for each year. (Round answer to 2 decimal places, e.g. 10.50.)
2021
Earnings per share
$
2022
$
QUESTION 5:
Presented below are long-term liability items for Oriole Company at December 31, 2022.
Bonds payable, due 2024
$650,000
Lease liability
60,000
Notes payable, due 2027
70,000
Discount on bonds payable
42,250
Prepare the long-term liabilities section of the balance sheet for Oriole Company. (Enter account name only and do not provide descriptive information.)
Oriole Company
Balance Sheet (Partial)
Put Correct Date here:
Question 6:
Crane Corporation issues $420,000 of bonds for $428,400.
(a)
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation Dr Cr
Parts b, c and d available
Question 7:
Sandhill Company issued $526,000 of 8%, 10-year bonds on January 1, 2022, at face value. Interest is payable annually on January 1, 2023.
(a)
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Jan. 1,
2022
Debit
Credit
Question 8:
Cullumber Company issued $730,000, 9%, 10-year bonds on December 31, 2021, for $660,000. Interest is payable annually on December 31. Cullumber Company uses the straight-line method to amortize bond premium or discount.
(a)
Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date Account Titles and Explanation
Dec. 31.
2021
Debit
Credit
QUESTION 9
Suppose the 2022 adidas financial statements contain the following selected data (in millions).
Current assets
$5,700
Cash
$900
Total assets
10,100
Interest expense
290
Current liabilities
4,100
Income taxes
240
Total liabilities
6,262
Net income
370
Compute the following values.
(a) Debt to assets ratio. (Round to O decimal places, e.g. 60.)
(b) Times interest earned. (Round to 2 decimal places, e.g. 6.25.)
%
times
Question 10:
On January 1, 2022, Sandhill Inc. entered into an agreement to lease 20 computers from Drummond Electronics. The terms of the lease agreement require three annual rental payments of $41,000 (including 10% interest) beginning December 31, 2022. The present value of the three rental payments is $101,959. Sandhill considers this a finance lease.
Prepare the journal entry to record the lease agreement on the books of Sandhill Inc. on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date Account Titles and Explanation
Jan. 1
Debit
Credit
Question 11:
Sandhill Company owns 30% of Lauer Company. For the current year, Lauer reports net income of $250,000 and declares and pays a $50,000 cash dividend.
Record Sandhill’s equity in Lauer’s net income and the receipt of dividends from Lauer. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
Dec. 31
Dec. 31
(To record equity in Lauer’s net income)
(To record dividends received)
QUESTION 12:
In its first year of operations, Oriole Corporation purchased available-for-sale debt securities costing $67,500 as a long-term investment. At December 31, 2022, the fair value of the securities is $62,750.
Prepare the adjusting entry to record the securities at fair value. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter O for the amounts.)
Date Account Titles and Explanation
Dec. 31
Debit
Credit
Question 13:
At December 31, 2022, the trading debt securities for Crane, Inc. are as follows.
Security
Cost
Fair Value
A
$17,500
$15,800
B
12,200
14,200
| 1
с
22,500
19,400
$52,200
$49,400
(a)
Prepare the adjusting entry at December 31, 2022, to report the securities at fair value. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter O for the amounts.)
Date
Dec. 31
Account Titles and Explanation
Debit
Credit
Question 14:
The following T-account is a summary of the Cash account of Bramble Company.
Cash (Summary Form)
Balance, Jan. 1
8,600
Receipts from customers
365,800
Payments for goods
201,500
Dividends on stock investments
Proceeds from sale of equipment Proceeds from issuance of
5,600 36,200
Payments for operating expenses 140,400
Interest paid
10,200
Taxes paid
8,400
bonds payable
500,100 Dividends paid
59,800
Balance, Dec. 31
496,000
What amount of net cash provided (used) by financing activities should be reported in the statement of cash flows? (Show amount that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis e.g. (15,000).)
Net cash
by financing activities $
Question 15:
Vaughn, Inc. reported net income of $2.45 million in 2022. Depreciation for the year was $156,800, accounts receivable decreased $343,000, and accounts payable decreased $274,400.
Compute net cash provided by operating activities using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis e.g. (15,000).)
Vaughn, Inc.
Statement of Cash Flows-Indirect Approach
Adjustments to reconcile net income to
$
40
Question 16:
Suppose that during 2022, Cypress Semiconductor Corporation reported net cash provided by operating activities of $80,649,000, cash used in investing of $40,662,000, and cash used in financing of $7,542,000. In addition, cash spent for plant assets during the period was $27,769,000. No dividends were paid.
Calculate free cash flow. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Free cash flow
$
Question 17:
Cullumber Company’s investments in equity securities at December 31 show total cost of $202,000 and total fair value of $208,500. Cullumber has less than a 20% ownership interest in the equity securities. Prepare the adjusting entry. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter O for the amounts.)
Account Titles and Explanation
Debit
Credit
Question18:
Here are comparative balance sheets for Sheridan Company. Prepare a statement of cash flows-indirect method.
SHERIDAN COMPANY
Comparative Balance Sheets
December 31
Assets
2020
2019
Cash
$73,000
$22,000
Accounts receivable
88,000
75,000
Inventory
173,000
188,000
Land
71,000 100,000
Equipment
264,000
198,000
Accumulated depreciation – equipment
(65,000) (32,000)
Total
$604,000
$551,000
Liabilities and Stockholders’ Equity
Accounts payable
$36,000
$47,000
Bonds payable
149,000
212,000
Common stock ($1 par)
212,000 176,000
Retained earnings
207,000
116,000
Total
$604,000
$551,000
Additional information:
Additional information:
1.
Net income for 2020 was $97,000.
2.
Cash dividends of $6,000 were declared and paid.
3.
Bonds payable amounting to $63,000 were redeemed for cash $63,000.
4.
Common stock was issued for $36,000 cash.
5.
Equipment that cost $50,000 and had a book value of $27,000 was sold for $35,000 during 2020; land was sold at cost.
(a)
Prepare a statement of cash flows for 2020 using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis e.g. (15,000).)
SHERIDAN COMPANY Statement of Cash Flows
Adjustments to reconcile net income to
>
$
Question 19:
The net income for Sheffield Co. for 2022 was $276,200. For 2022, depreciation on plant assets was $72,400, and the company incurred a loss on disposal of plant assets of $30,800.
Compute net cash provided by operating activities under the indirect method, assuming there were no other changes in the company’s accounts. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).)
Sheffield Co.
Statement of Cash Flows-Indirect Method
Adjustments to reconcile net income to
Question 20:
Suppose these selected condensed data are taken from recent balance sheets of Bob Evans Farms (in thousands).
2022
2021
Cash
$13,116
$7,878
Accounts receivable (net)
21,673
20,721
Inventory
28,681
29,935
Other current assets
13,690
11,360
Total current assets
$77,160
$69,894
Total current liabilities
$257,200
$317,700
(a1) Compute the current ratio for each year. (Round answers to 2 decimal places, e.g. 0.15.)
Current ratio
2022
:1
2021
:1
