Formula for Straight Line Depreciation
What is (Cost-Salvage Value)/(Useful Life) ?
Classify these liabilities: Short term or long term
Notes payable maturing in 2 years
Notes payable due in 18 months
Accounts Payable due in 11 months.
Long term, Long term, Short term
When a bond is issued, what is being credited to record the issuance of a bond?
Bonds Payable
Definition: Stock that is reacquired by a corporation
What is treasury stock?
Increases in Current Liabilities from year 1 to year 2 have positive cash flow. True or False
True
A machine produces 450,000 units. The cost of machine is $210,000 with a salvage value of $15,000. The useful life of the machine is 5 years. Find the depreciation per unit.
$0.43
Definition: Probable future payment of assets or services that a company is presently obligated to make as a result of past transactions or events.
What is a liability?
Bond sells at a ______ when the contract rate is less than the market rate.
What is a discount?
What is the dividend yield?
Annual cash dividends per share/market value per share
Which of the following does not fall in the Operating Section of the Statement of Cash Flows?
Increase in Accounts Payable
Depreciation Expense
Increase in Long Term Notes Payable
Decrease in Salaries Payable
Target has Net Sales of $4,200,000 and Average Total Assets of $3,750,000. Walmart has Net Sales of $3,600,000 and Average Total Assets of $3,100,000. Calculate each companies Total Asset Turnover and determine who has the better ratio.
Target 1.12
Walmart 1.16
Walmart has better ratio.
Bobs Company renegotiated a $300,000 accounts payable with one of its suppliers into a 60-day note, signed on May 15th, 2024 with an interest rate of 6%. Record the journal entry for the acceptance of the note on May 15th.
Accounts Payable 300000
Notes Payable 300000
Derby Company issued 10 $1,000 bonds at 97. These were 5-year bonds with 6% interest rate. Write the journal entry for the issuance of the bond.
Discount on Bonds Payable 300
Bonds Payable 10000
On May 20, 2023, XYZ Corporation issues 80 shares of common stock with a par value of $10 for $30 per share. XYZ Corp. repurchases 25 shares of its common stock from the market on September 5th, 2023, at a price of $17 per share. Record the necessary journal entry for this repurchase.
Treasury Stock 425
Cash 425
Calculate the Net Cash Flow Used/Provided for the Financing Section.
a. Issued common stock for $20,000 cash
b. Paid $9000 cash to retire a notes payable at its $9000 maturity value
c. Paid cash dividends of $11,000
d. Paid $5,000 cash to acquire its treasury stock.
(5000)
On September 15th, XYZ Company sold a piece of equipment for $8,000 cash. The equipment had an original cost of $20,000 and accumulated depreciation of $15,000. Record the journal entry to record the sale of the equipment.
Cash 8000
Accumulated Depreciation 15000
Equipment 20000
Gain on sale of equipment 3000
Home Depot sells materials for $6,000 cash and has a 5% sales tax. Create the journal entry for this sale.
Cash 6300
Sales 6000
Sales taxes payable 300
ABC Corporation issued 25 $1000 bonds, at 5% interest, maturing in 12 years on May 1, 2036. The bonds were issued at 98 on May 1, 2024. Interest will be paid semiannually. Record the journal entry for the interest payment on November 1st, 2024.
Bond Interest Expense 625
Cash 604
Discount on Bonds Payable 21
Dividends are declared and paid every 3 years for $750. If Bob is a cumulative preferred stockholder and Jerry is a noncumulative preferred stockholder, how much in dividends would Jerry receive every 3 years when dividends are paid?
$750
A machine with a cost of $220,000 and accumulated depreciation of $86,000 is sold for $77,025 cash. The amount reported as a source of cash under cash flows from investing activities is
a. $81,000
b. $0; this is a financing activity
c. $77,025
d. $134,000
e. $228,975
c.
A truck costing $275,000 with a 6 year life and estimated $25,000 salvage value was purchased by Ricky on January 1. Calculate the total accumulated depreciation over the first 2 years.
Year 1: $110,000
Year 2: $66,000
Total = $176,000
In order to alleviate immediate cash flow pressures, Target restructure a $150,000 accounts payable into a 180-day note, signed on May 5, 2024, with an interest rate of 7%. The company reports bi-annual reports and makes adjusting journal entries as need. Write the journal entry needed on June 30th.
Interest Expense 1633
Interest Payable 1633
John had a car loan for $25,000 with an interest rate of 6% and monthly payments of $700. How much interest expense is recorded after 2 months?
Month 1: $125
Month 2: $122
Total: $247
On September 5th, 2023 Stylish Sandwiches issued 300 shares of 6% non-cumulative preferred stock with a par value of $25 for $40 per share. Calculate the total cash received by the stockholders if a dividend is declared this year.
$420
List 3 types of Noncash Investing and Financing Activities
Retirement of debt by issuing equity stock
Conversion of preferred stock to common stock
Lease of assets in a long-term lease transaction
Purchase of long term assets by issuing a note or bond
Exchange of noncash assets for other noncash assets
Purchase of noncash assets by issuing equity of debt.