Homework Packet

for
Intro to
Financial Accounting

FALL 2024
 Chapter 1 Homework
Submit your answers in CANVAS before it is due

When inputting your answers in CANVAS do not include $ signs or commas in your answers. DO NOT include
words in your answer unless specifically asked.

Use the following information to answer questions 1 – 10

For each item, determine the type of account (Asset, Liability, Stockholder’s Equity, Dividends, Revenue or
Expense) and the type of activity (Operating, Investing or Financing).

When answering the question, input ONLY the first letter, for example: if the answer was Liability input L as
the answer.

Item Type of Account Type of Activity

A, L, SE, D, R or E O, I, F
Utilities payable 1. 2.

Land 3. 4.

Common stock 5. 6.

Rent expense 7. 8.

Service revenue 9. 10.

Use the following to answer questions 11 – 14

The company reports the following amounts at the end of the year:

Revenues $750,000
Dividends 10,000
Common stock 50,000
Expenses 625,000
Assets 500,000
Liabilities 100,000

11. $_____________ Calculate net income.

12. $_____________ Calculate stockholders’ equity at the end of the period.

13. $______________Calculate ending retained earnings:

14. $______________Calculate beginning retained earnings:

Chapter 1 Page 1-1

 Use the following to answer questions 15 - 19

The company had the following account balances at the end of December before preparing the financial
statements:

Accounts Balances
Common stock $300,000
Utilities expense 15,000
Cash 30,000
Accounts payable 18,000
Dividends 25,000
Salaries expense 300,000
Service revenue 500,000
Beginning Retained earnings 200,000
Supplies 5,000
Equipment ?

15. $________________What were total expenses for the year?

16. $________________Calculate their net income for the year.

17. $________________Calculate their ending balance in Retained Earnings.

18. $________________What is their balance in stockholder’s equity on 12/31.

19. $________________ What is the balance of the Equipment account.

Use the following to answer questions 20 – 22

Determine ending retained earnings for years 1, 2 and 3. At the beginning of year 1, the retained earnings had a
$0 balance.

Year Net Income Dividends Retained Earnings

1 $250,000 $10,000 20.
2 185,000 25,000 21.
3 300,000 50,000 22.

Chapter 1 Page 1-2

 Use the following to answer questions 23 – 28

The company provides food delivery services to construction sites. At the end of the year, the company reports
the following amounts:

Cash $50,000 Service revenue $750,000

Paper supplies used 12,000 Garage/Office 572,000
Paper supplies 1,000 Food expense 250,000
Note payable 250,000 Food trucks 75,000
Accounts payable 15,000 Maintenance expense 25,000
Salaries expense 300,000 Salaries payable 20,000

In addition, the company had common stock of $100,000 at the beginning of the year and issued an additional
$50,000 of stock during the year. The company also had retained earnings of $180,000 at the beginning of the
year and declared $80,000 in dividends during the year.

23. $_________________ Determine Net Income

24. $_________________Determine ending Common Stock

25. $_________________Determine ending Retained Earnings

26. $_________________ Determine Total Assets

27. $_________________Determine Total Liabilities

28. $_________________ Determined Total Stockholders’ Equity

Chapter 1 Page 1-3

 Use the following to answer questions 29 – 32

Match the four underlying assumptions of Generally Accepted Accounting Principles with its description.

Assumption Description
29. _____ Economic entity a. In the absence of information to the contrary, it is
anticipated that a business entity will continue to operate
indefinitely
30. _____ Going concern b. The economic life of a company can be divided into
artificial time intervals for financial reporting.
31. _____ Periodicity c. A common denominator is needed to measure all
business activities
32. _____ Monetary unit d. Economic events can be identified with a particular
economic body.

Use the following to answer questions 33 – 40

Income Statement Statement of Stockholders’ Equity

Revenues #33 Common stock Retained earnings
Expenses: Beginning $300,000 $225,000
Salaries $290,000 Issuance #35
Administrative 120,000 Net income 75,000
Utilities 20,000 Dividends #36
Total expenses 430,000 Ending $375,000 $250,000
Net income #34
Balance Sheet
Assets Liabilities
Cash $25,000 Accounts payable $10,000
A/R 3,000 Notes payable 155,000
Supplies #37 Total liabilities $165,000
Prepaid rent 10,000 Stockholders’ Equity
Equipment 150,000 Common stock ?
Building 600,000 Retained earnings ?
Total stockholders’ equity #39
Total assets #38 Total L and SE #40

33. $____________Revenue: 37. $__________Supplies:

34. $____________Net Income: 38. $__________Total Assets:

35. $____________Issuance: 39. $__________Stockholders’ Equity:

36. $____________Dividends: 40. $__________Total L & SE:

Chapter 1 Page 1-4

 Chapter 2 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 5

Determine if the normal balance is a Debit (D) or a Credit (C). Input only the first letter of the answer (D or C).

Normal Account
Balance
D or C
1 ________ Retained earnings
2 ________ Accounts payable
3 ________ Advertising expense
4 ________ Service revenue
5 ________ Accounts receivable

Use the following to answer questions 6 – 8

Analyze each transaction. Under each category in the accounting equation, indicate whether the transaction:
A. increases,
B. decreases, or
C. has no effect. The item (a) is provided as an example.

(a) Paid rent for the current month. (Rent expense increases causing Stockholders’ Equity to decrease, Cash used
to pay, causing assets to decrease, and no effect on Liabilities).

6. Provide services to customers and receive cash.

7. Purchased office supplies on account.
8. Paid salaries to employees for work performed during the month.

Asset Liability Stockholders’ Equity

(a) B C B
6.
7.
8.

9. At the beginning of the month, the balance in the Retained Earnings account is $225,000 for the company.
During the month the company had the following external transactions.

(a) Issue common stock for cash $50,000

(b) Provide services to customers on account 80,000
(c) Pay rent for the month 25,000
(d) Purchase equipment and pay cash 75,000
(e) Pay workers' salaries for the month 50,000
(f) Pay dividends to stockholders 25,000
(g) Provide services to customers in exchange for cash 60,000

$______________Determine ending Retained Earnings.

Chapter 2 Page 2-1

Use the following to answer questions 10 – 13

Indicate which of the following accounts should be debited and which should be credited. An example has been
provided (ex). Purchase Office Supplies in exchange for cash Debit : N (Supplies) Credit: C (Cash)…see below. Only
include the letter of the account not the account name.

A. Accounts payable E. Dividends I. Rent expense M. Service revenue

B. Accounts receivable F. Equipment J. Retained earnings N. Supplies
C. Cash G. Notes payable K. Salaries expense O. Utilities expense
D. Common stock H. Prepaid rent L. Salaries payable

Account Debited Account Credited

ex Purchase Office Supplies in exchange for cash N C
10. Received utility invoice for the month, will pay next week

11. Purchased equipment with a note, will pay over three years

12. Used the rental facilities that had been paid for in the past

13. Provided services to customers on account

Use the following to answer questions 14 - 20

Post each transaction to the T-accounts below and compute the ending balances of each account. The balances at
the beginning of the week are shown in the T accounts. NOTE: The accounts are only a partial listing of the
company’s Chart of Accounts

Recorded transactions to be posted:

Debit Credit Debit Credit
1 Cash 9,000 4 Advertising expense 8,000
Accounts receivable 9,000 Accounts payable 8,000
2 Deferred revenue 6,000 5 Accounts payable 10,000
Service revenue 6,000 Cash 10,000
3 Accounts receivable 15,000 6 Office Supplies 1,000
Service revenue 15,000 Cash 1,000

Following are some (not all) of the accounts for the company with balances at the beginning of the week:
Cash Accounts Receivable Office Supplies Accounts Payable
20,000 10,000 500 3,000

Deferred Revenue Service Revenue Advertising Expense

8,000 50,000 5,000

14. $___________What is the Cash account balance at the end of the week?

15. $___________What is the Accounts Receivable account balance at the end of the week?
16. $___________What is the Office supplies account balance at the end of the week?

Chapter 2 Page 2-2

17. $___________What is the Accounts payable account balance at the end of the week?

18. $___________What is the Deferred revenue account balance at the end of the week?

19. $___________What is the Service revenue account balance at the end of the week?

20. $___________What is the Advertising expense account balance at the end of the week?

Use the following to answer questions 21 – 27

LIABILITIES & INCOME STATEMENT
ASSETS
STOCKHOLDERS’ EQUITY ACCOUNTS
A. Cash F. Accounts Payable K. Service Revenue
B. Accounts Receivable G. Salaries Payable L. Advertising expense
C. Supplies H. Deferred revenue M. Rent Expense
D. Prepaid advertising I. Notes Payable N. Salaries/Wage expense
E. Equipment J. Retained Earnings O. Utilities expense

February 1st transaction is completed as an example: Only include the letter of the account not the account name.
Date Transaction AMOUNT
ex Feb 1 Paid an Accounts Payable $5,000
21 Feb 2 Paid January salaries to employees 8,000
22 Feb 7 Collected from customers from services provided in January 25,000
23 Feb 14 Purchased supplies on account 500
24 Feb 15 Radio advertisement paid for last month was used today 2,000
25 Feb 28 Invoiced customers for services provided in February 30,000
26 Feb 28 Received the utility bill for February, will pay next month 1,000
Date Account Debit Credit
ex FEB 1 F Account payable (L-) 5,000
A Cash (A-) 5,000
21. Feb 2

22. Feb 7

23. Feb 14

24. Feb 15

25. Feb 28

26. Feb 28

Cash
BB 15,000 27. $__________If January 31st cash was $15,000, what is the cash balance at
5,000 (ex) the end of the day on 2/28? (Use the T account to assist answering #27)

Chapter 2 Page 2-3

Use the following to answer questions 28 – 35

The company has provided their trial balance at the end of the year.

Debits Credits
Cash $60,000
Accounts receivable 80,000
Supplies 5,000
Prepaid expenses 15,000
Buildings/Equipment, net 1,200,000
Accounts payable $35,000
Income tax payable 50,000
Utilities payable 3,000
Deferred revenue 10,000
Notes payable 300,000
Common stock 550,000
Retained Earnings 367,000
Dividends 120,000
Service revenue 900,000
Salaries expense 400,000
Insurance expense 30,000
Advertising expense 120,000
Supplies expense 15,000
Depreciation expense 100,000
Rent expense 50,000
Utilities expense 20,000
Totals $2,215,000 $2,215,000

Based on the data provided in the trial balance find the following:

28. $____________Determine Total expenses.

29. $____________Determine Net income

30. $____________Determine Beginning Retained Earnings

31. $____________Determine Ending Retained Earnings

32. $____________Determine Total Stockholders’ Equity

33. $_____________Determine Total Liabilities

34. $_____________Determine Total Assets

35. $_____________At the beginning of the year, the company had $500,000 in its common stock account. How
much stock was issued during the year?

Chapter 2 Page 2-4

 Chapter 3 Homework
Submit your answers in Canvas before it is due

Use the following to answer questions 1 – 4

A company maintains its records using accrual basis accounting; however, their accountant wants to create a
statement of cash flows and needs to determine the cash flow from operating activities. For simplicity, we assume
only one expense account (salaries). The following is data gathered from their records.

Services provided to customers during the period $450,000

Salaries expense for the period 200,000
Accounts receivable (beginning balance) 25,000
Accounts receivable (ending balance) 18,000
Salaries payable (beginning balance) 15,000
Salaries payable (ending balance) 17,000

Complete the T-accounts for ACCOUNTS RECEIVABLE and SALARIES PAYABLE to help answer questions #1 &2.
NOTE: ALL SERVICES PROVIDED ARE ON ACCOUNT AND SALARIES EXPENSE ARE RECORDED BEFORE THEY ARE
PAID.
ACCOUNTS RECEIVABLE SALARIES PAYABLE

1. Determine the amount of cash collected from customers during the period: $__________

2. Determine the amount for cash paid for salaries during the period: $___________

3. Determine accrual basis net income for the period: $______________

4. Determine cash flow from operating activities for the period: $_____________

Use the following to answer questions 5 – 11

Determine the amount of revenue or expense to recognize in SEPTEMBER for accrual basis and for cash basis (do
not include negative signs). Use 0 (zero) if no revenue or expense should be recognized.
Accrual basis Cash basis
5 Paid $500 for office supplies on September 1st and used $400 during the month.
Customers paid the company $900 in September, the company provided $700 of
6
services in September and will provide the remaining $200 later.
7 The company borrowed $10,000 from the bank and received cash in September.
The company paid $800 on September 30 to rent a machine for October and
8
November.
9 The company bought a new truck for $50,000 and paid cash on September 15.
1
Received a utility bill on September 30 for $450, they will pay it next week.
0
1 Salaries were recorded for the month of September for $40,000 and $30,000 has
1 been paid in September.

Chapter 3 Page 3-1

Use the following to answer questions 12 - 13

On September 1st, the company received a $6,000 payment from a customer for services to be rendered evenly
over the next six months. Deferred Revenue was credited on September 1st and no other entries regarding this
transaction were made until December 31st.

12. $__________ After the adjusting entry has been recorded on December 31st, determine the ending balance in
the deferred revenue account that should be recorded on the December 31st Balance Sheet.

13. $_________ After the adjusting entry has been recorded on December 31st, determine the amount of service
revenue that should be recognized for this customer on the annual income statement on December 31st.

Use the following to answer questions 14 – 15

On October 1st the company borrows $300,000 from a local bank for nine months. A note is signed with principal
and 8% interest to be paid when the note matures next year. A note payable was recognized on October 1st, and
no other entries regarding this transaction were made until December 31st.

14. $__________ In the adjusting entry recorded on December 31st determine the amount of interest expense
that should be reported.

15. What effect would failure to record the adjusting entry for this note payable have on the financial statement
items?
A. would cause it to be overstated
B. would cause it to be understated
C. would have no effect

Assets Liabilities Stockholders’ Equity Revenue Expenses Net income

Use the following to answer questions 16 – 17

The company incurs employee salaries of $40,000 for the last week of December which will be paid on January 5th.

16. Record the adjusting entry on December 31st related to the employee salaries

Account Debit Credit

17. $_________Indicate by how much net income in the income statement is higher or lower if the adjustment in
#13 is not recorded (if lower put “–“ in front of your answer).

Chapter 3 Page 3-2

Use the following to answer questions 18 - 19

On November 1st, the company pays a local radio station $15,000 for 3 months of radio ads that are to be aired
equally throughout the three months. Prepaid Advertising was debited on November 1st and no other entries
regarding this transaction were made since then.

18. $__________ After the adjusting entry has been recorded on December 31st, determine the amount of
advertising expense for the year ended December 31st.

19. $__________ After the adjusting entry has been recorded on December 31st, determine the ending balance in
the prepaid advertising account that should be recorded on the December 31st Balance Sheet.

Use the following to answer questions 20 – 26

The following are the year-end account balances (prior to closing) of the company:

Cash $25,000
Accounts Receivable 40,000
Supplies 3,000
Equipment 800,000
Accumulated depreciation 200,000
Accounts payable 20,000
Notes payable 100,000
Common stock 300,000
Retained earnings 195,000
Dividends 30,000
Service revenue 600,000
Salaries expense 400,000
Supplies expense 25,000
Rent expense 30,000
Depreciation expense 50,000
Miscellaneous expense 12,000

20. $___________Determine total expenses for the year

21. $___________Determine net income for the year

22. $___________ Determine ending retained earnings for the year

23. $___________ Determine ending total stockholders’ equity for the year

24. $___________Determine total Current Assets at the end of the year

25. $___________Determine Total Assets at the end of the year

26. Should Retained earnings be closed at year end?

Chapter 3 Page 3-3

Use the following to answer questions 27 – 29

The Company had the following Net Income (Loss) for 20A – 20D (the first four years of operations). Determine
their Ending Retained Earnings amount for each year. (Keep your answer “in millions” like the example).
The Company
(In Millions)
Ending
Retained
Year Net Income or (Loss) Dividends Earnings
20A $1.25 $0.05 $1.20

27. 20B $1.50 $0.25

28. 20C $1.00 $0.30

29. 20D $1.70 $0.50

Use the following to answer questions 30 – 33

The following account balances appear in the 20XC year-end POST-closing trial balance of the company:

Cash $10,000
Accounts Receivable 35,000
Inventory 150,000
Equipment 550,000
Accumulated Depreciation 100,000
Accounts Payable 8,000
Notes Payable 250,000
Common stock 200,000
Retained earnings ?

30. $___________Determine the total amount of debits that would be shown on the post-closing trial balance

31. $___________Determine retained earnings that would be shown on the post-closing trial balance

32. $___________Determine total current assets

33. $___________ Determine the book value of the equipment

Chapter 3 Page 3-4

Use the following to answer questions 34 - 36

The year-end adjusted trial balance of the Corporation included the following account balances:

Retained earnings $350,000

Service revenue 500,000
Salaries expense 200,000
Rent expense 50,000
Interest expense 20,000
Dividends 150,000

Prepare the closing entries.

34. $________ In preparing the closing entries for the temporary accounts, how much should Retained earnings
be credited?

35. $________ In preparing the closing entries for the temporary accounts, how much should Retained earnings
be debited?

36. $_________ After closing the accounts, what is the ending balance in Retained Earnings?

Use the following for questions 37-39

The company has provided their accounts in alphabetical order. Use these accounts to answer the following
questions.
Accounts payable $25,000
Accounts Receivable 30,000
Accumulated depreciation 200,000
Cash 20,000
Common stock 150,000
Depreciation expense 50,000
Dividends 10,000
Equipment 700,000
Deferred revenue 10,000
Notes payable 200,000
Rent expense 30,000
Retained earnings 95,000
Salaries expense 300,000
Service revenue 500,000
Supplies 5,000
Supplies expense 35,000

37. $__________ Total current assets

38. $__________Book value of the equipment

39. $__________Net income

Chapter 3 Page 3-5

 Chapter 4 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 4

Determine whether the firm reports each of the following items as part of cash, cash equivalents, or neither in the
balance sheet.
Item Cash, Cash equivalent,
or neither
1 Credit card sales
2. Supplies
3 90-day certificate of deposit
4. Accounts receivable

Use the following to answer questions 5 – 8

Bank Reconciliation: Identify whether the item should be added or subtracted from the bank balance or the company
balance. Use the number (1-4) for your response. For instance, if the amount should be added to bank statement
balance you would input 1.
1. Added to bank statement balance
2. Subtracted from bank statement balance
3. Added to company cash balance
4. Subtracted from company cash balance

Item #
5 Checks written by the company but not cleared by the bank
6 Notes receivable collected by the bank for the company
7 Bank error, overcharged the company for bank fees
8 NSF check

Use the following to answer questions 9 -11

At the end of the month, the general ledger of the company shows a balance for cash of $4,500. Cash receipts yet to
be deposited into the checking account total $3,000, while checks written by the company but not yet processed by
the bank total $2,500. The company’s balance of cash does not reflect a NSF check of $100, a service fee of $10 and
interest earned of $5 and a customer’s payment collected by the bank of $300; however, these amounts are included
in the balance of cash of $4,195 reported by the bank as of the end of the month.

Answer the following based on the process of doing the bank reconciliation:

9. $________Determine the total amount that is used to reconcile the Bank balance (include “–“ if needed):

10. $_______Determine the total amount that is used to reconcile the Company cash balance (include “–“ if needed)

11. $___________What is the balance in the company’s cash account after the reconciliation?

Chapter 4 Page 4-1

Use the following to answer questions 12 – 15

Type of CASH FLOW

Cash involved? Operating, Investing, Financing,
Transaction
(Yes or No) or None
Use the first letter (O, I, F, N)
12. Sold an old warehouse no longer being used
13. Paid workers for the work they performed
14. Issue common stock for cash
15. Purchased building and land with cash

Use the following to answer questions 16 – 20

Determine the company’s cash flows based on the following:

Amount of
Transaction
Transaction
A Cash provided from long-term borrowing $200,000
B Cash used to pay the bank for a loan due this month 20,000
C Cash provided from consulting customers 175,000
D Cash used for purchase of office supplies 5,000
E Cash used for payment of office rent 7,500
F Cash provided from sale of equipment that had been used in operations 30,000
G Cash used to pay office utilities 3,000
H Cash used for payment of employee salaries 120,000
I Cash used for purchase of office equipment 215,000
Purchase of company vehicle paying 10% cash and signing a note payable for the
J
remaining balance. 60,000

16. $___________Refer to transaction J, how much should be included in cash used from investing activities?

17. $___________Determine the net cash flows from operating activities (include “–“ if needed)

18. $___________Determine the net cash flows from investing activities (include “–“ if needed)

19. $___________Determine the net cash flows from financing activities (include “–“ if needed)

20. $___________How much did cash change over the year?

Chapter 4 Page 4-2

Use the following to answer questions 21 - 25

The company's cash ledger reports the following for the end of the month

Deposits Checks
Date Amount No. Date Amount
3-Oct $10,000 1151 4-Oct $5,000
10-Oct 15,000 1152 6-Oct 8,000
17-Oct 25,000 1153 15-Oct 3,000
24-Oct 15,000 1154 16-Oct 10,000
Cash receipts 10/26 -10/27 10,000 1155 20-Oct 7,000
$75,000 1156 22-Oct 6,000
1157 29-Oct 1,000
Balance on October 1 $25,000 $40,000
Receipts 75,000
Disbursements 40,000
Balance on October 31 $60,000

Information from October's bank statement and company records reveals the following additional information:

a) The ending cash balance shown on the bank statement is $61,500.

b) Cash receipts of $10,000 from 10/26–10/27 are outstanding.
c) Checks 1156 and 1157 are outstanding.
d) The deposit on 10/24 includes a customer's check for $500 that did not clear the bank (NSF check).
e) Check 1154 was written for $1,000 for equipment purchased in October. The bank properly recorded the check
for this amount.
f) An automatic withdrawal for November rent was made on October 29 for $6,000.
g) The company’s checking account earns interest based on the average daily balance. The amount of interest
earned for October is $15.
h) In the past, one of the company’s customers requested their Account Receivable be converted to a Note
Receivable (they owed $2,000 to the company). On October 29th, the customer paid the amount owed by
depositing $2,020 ($2,000 note amount plus $20 interest) directly into the company bank account.
i) The bank charged the following service fees: $25 for NSF check and $10 account maintenance fee.

Prepare a bank reconciliation for October 31st to assist answering the questions following:

21. $___________Of the total checks written during the month, what amount should be deducted from the bank
balance during reconciling the bank account?

22. $___________ Of the cash receipts, what amount should be added to the bank balance during reconciling
the bank account?
Chapter 4 Page 4-3
23. When performing the bank reconciliation, how should the company treat check 1154?
A. add $9,000 to the company cash account.
B. subtract $9,000 from company cash account.
C. add $9,000 to the bank statement balance.
D. subtract $9,000 from the bank statement balance.

24. $___________The total amount needed to reconcile the company cash account was:

25. $___________What is the company’s cash balance after the reconciliation?

Use the following to answer questions 26 – 32

Below is a summary of all transactions of the company for the month.

Cash transactions
Cash collections from:
Sale of used office furniture $40,000
Borrowing from bank 100,000
Customers 200,000
Cash payments for:
Employee salaries 125,000
Dividends to stockholders 10,000
Advertising expense 5,000
Utilities expense 2,000
Purchased office equipment 150,000
Office supplies 1,000
Noncash Transactions
Issue note payable for equipment $150,000
Services to customers on account 45,000
Purchased land by signing a note payable 300,000

Prepare a statement of cash flows for the month, properly classifying each of the transactions into operating,
investing, and financing activities. The cash balance at the beginning of the month was $25,000.

26. $___________What is the amount of cash inflows from operating activities?

27. $___________What is the amount of cash outflows from operating activities?
28. $___________What is the Net Cash Flows from Operating Activities (if cash used, use “-“)?
29. $___________What is the Net Cash Flows from Investing Activities (if cash used, use “-“)?
30. $___________What is the Net Cash Flows from Financing Activities (if cash used, use “-“)?
31. $___________How much did cash change (if decrease, use “-“)
32. $___________What is the ending cash balance for the company?

Chapter 4 Page 4-4

 Chapter 5 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 5

For the next few weeks, the company is offering a 20% trade discount when providing services of $10,000 or more
to its customers to encourage customers to buy more services. The company also offers 2/10, n30 on all credit
sales. All credit sales are invoiced at the end of the month. The company provided the following services this
month; amounts are shown before trade discounts have been deducted:
 Provides $12,000 services for Customer A— on account— pays within 10 days
 Provides $7,000 services for Customer B— on account— pays within 10 days
 Provides $20,000 services for Customer C— on account— pays within 30 days
 Provides $5,000 services for Customer D—received payment last month

1. $___________What amount of Service revenue should the company record for Customer A?

2. $___________What amount of Service revenue should the company record for Customer B?

3. $___________Customer B pays within 10 days; how much will they pay?

4. $___________Determine the monthly Service revenue for the company

5. $___________Determine the company’s Net service revenue for the month

Use the following to answer questions 6 – 7

The company reported the following amounts at the end of the year:

Total sales $750,000

Accounts receivable 40,000
Sales allowances 1,000
Allowance for Uncollectible accounts 2,000
Sales discounts 11,000
Sales returns 8,000

6. $___________Determine total contra revenues for the company

7. $___________Determine net sales for the company

Use the following to answer questions 8 – 11

The following information pertains to the company for the month of November:

Credit sales $900,000

Accounts payable 22,000
Accounts receivable 50,000
Allowance for Uncollectible accounts 300 credit
Cash sales 450,000

The company uses the percent of receivables method and estimates it will not collect 7% of accounts receivable.

Chapter 5 Page 5-1

8. $___________Determine the ending balance for the Allowance for Uncollectible Accounts

9. $___________Determine the appropriate amount to record for Bad Debt expense

10. $___________Assuming the Allowance for Uncollectible accounts had a $500 debit balance instead of the
previous credit balance, determine the amount to record for Bad Debt expense

11. $___________After recording bad debt expense, the Net Accounts Receivable is:

Use the following to answer questions 12 – 15

At December 31, the company reported accounts receivable of $80,000 and an allowance for uncollectible
accounts of $1,000 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible
accounts should be 6% of accounts receivable.

12. $___________Estimate the amount of uncollectible receivables:

13. $___________When recording the adjusting entry for bad debt expense how much should Allowance for
Uncollectible accounts be credited?

14. On January 10, a customer’s account balance of $200 is written off as uncollectible. Record the write-off.

15. $___________If Net Accounts receivable were $75,200 before the write-off, how much are Net Accounts
receivable AFTER the write-off?

Use the following to answer questions 16 - 19

For each transaction indicate whether it should:
A. increase,
B. decrease, or
C. no effect.

Credit sales
transaction cycle Assets Liabilities Stockholders’ equity Revenues Expenses
16. Provide services on account
17. Estimate uncollectible accounts
18. Write off accounts as uncollectible
19. Collect on account previously written off

Chapter 5 Page 5-2

Use the following to answer questions 20 – 22
At the beginning of the year; the company’s allowance for uncollectible accounts had a beginning balance of
$7,000. On January 22nd, the company wrote off the A/R from customer C for $100

20. Record the entry for write-off

21. $___________By the end of the year (December 31 st); total accounts written off were $6,100 (including the
write off for customer C). What is the balance in the allowance for uncollectible accounts after all the write-
offs?

22. $___________How much did bad debt expense change when the company wrote off the accounts
receivables?

Use the following to answer questions 23 – 25

The company invested $100,000 on November 1, 20XA at 6% simple interest for 18 months.

23. $______________Determine interest revenue for 20XA

24. $_______________Determine interest revenue for 20XB

25. $_______________Determine interest revenue for 20XC

Use the following to answer questions 26 – 27

The company invested $100,000 on September 1, 20XA at 12% simple interest for 1 year.

26. $______________Determine interest revenue for 20XA

27. $______________ Determine interest revenue for 20XB

Use the following to answer questions 28 – 30

The company lent $100,000 on October 1, 20XA at 9% simple interest for 24 months.

28. $______________Determine interest revenue for 20XA

29. $_______________Determine interest revenue for 20XB

30. $_______________Determine interest revenue for 20XC

Chapter 5 Page 5-3

 Chapter 6 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 6

Case 1 Case 2 Case 3 Case 4

Beginning inventory $55,000 $47,000 $30,000 ?
Ending inventory ? 60,000 12,000 34,000
Purchases 753,000 ? 654,000 852,000
Cost of goods sold 800,000 765,000 ? 840,000

1. $____________ For case 1, determine goods available for sale

2. $____________For case 1, determine ending inventory
3. $____________For case 2, determine goods available for sale
4. $____________ For case 2, determine Purchases
5. $____________For case 3, determine cost of goods sold
6. $____________ For case 4, determine beginning inventory

Use the following to answer questions 7 – 17

During September, the company sells 485 watches for $250.00 each. The company has the following inventory
purchase transactions for September:

Date Transaction # of Units Unit cost Total Cost

1-Sep Beginning Inventory 50 $145.00 $7,250
4-Sep Purchase 300 $150.00 45,000
24-Sep Purchase 150 $152.00 22,800
500 $75,050

7. $____________What were company’s sales for the period?

For questions 8 - 10 assume the company uses First-in, First-out (FIFO) inventory valuation.

8. $_____________Calculate ending inventory (FIFO)

Chapter 6 Page 6-1

9. $_____________Calculate cost of goods sold (FIFO)

10. $_____________ Calculate gross profit (FIFO)

For questions 11 - 13 assume the company uses Last-in, First-out (LIFO) inventory valuation.

11. $_____________Calculate ending inventory (LIFO)

12. $_____________Calculate cost of goods sold (LIFO)

13. $_____________ Calculate gross profit (LIFO)

For questions 14 - 16 assume the company uses Weighted Average cost inventory valuation.

14. $_____________Calculate ending inventory (WA)

15. $_____________Calculate cost of goods sold (WA)

16. $_____________Calculate gross profit (WA)

17. Based on the above, which method would show a larger net income number? (FIFO, LIFO or
WA)

Use the following to answer questions 18 – 21

The company begins the year with inventory costing $50,000 and ends the year with inventory costing $38,000. During
the year, the following amounts are recorded:

Sales $760,000
Sales returns & allowances 5,000
Sales discounts 10,000
Purchases 495,000
Operating expenses 150,000

18. $_____________Net Sales

19. $_____________Calculate cost of goods sold

20. $_____________ Gross profit

Chapter 6 Page 6-2

21. ___ ___. __% Gross profit ratio (rounded to once decimal place)

Chapter 6 Page 6-3

Use the following to answer questions 22 – 29
The company reports the following amounts in its December 31, 20XD income statement:

Sales discounts $5,000 Cost of goods sold $450,000

Net sales 800,000 Salaries expense 250,000
Utilities expense 1,000 Advertising expense 50,000
Interest revenue 5,000 Effective income tax rate 15%

22. $____________Determine Sales

23. $____________Determine gross profit

24. $____________Determine operating expenses

25. $____________Determine Income before income taxes (IBT)

26. $____________Determine Income tax expense

27. $____________Determine net income

28. ___ ___.___% Calculate the company’s gross profit ratio (round to one decimal place).

29. _____________Comparing the company’s common sized income statement with its competitor. The competitor’s
gross margin is 45.0%, which company is doing better?

Chapter 6 Page 6-4

Use the following to answer questions 30 – 35
Find the missing amounts:

Case 1 Case 2 Case 3

Net Sales $690,000 $710,000 ?
COGS ? 335,000 400,000
Gross profit 350,000 ? 325,000
Operating expense 300,000 285,000 ?
Operating income ? ? 75,000

30. $____________For case 1, determine cost of goods sold

31. $____________For case 1, determine operating income (include “-“ if needed)

32. $____________For case 2, determine gross profit

33. $____________For case 2, determine operating income (include “-“ if needed)

34. $____________For case 3, determine net sales

35. $____________For case 3, determine operating expense

36. Inventory records for the company revealed the following:

Number Unit
Date Transaction of Units Cost
Apr. 1 Beginning inventory 70 $70.00
Apr. 4 Purchase 130 $75.00

The company sold 190 units of inventory during the month. Ending inventory assuming LIFO would be $____________

Chapter 6 Page 6-5

37. Inventory records for the company revealed the following:

Number Unit
Date Transaction of Units Cost
Mar. 1 Beginning inventory 70 $80.00
Mar. 6 Purchase 300 $84.00
Mar. 23 Purchase 105 $85.00

The company sold 470 units of inventory during the month. Ending inventory assuming FIFO would be $___________

38. Inventory records for the company revealed the following:

Number Unit
Date Transaction of Units Cost
Mar. 1 Beginning inventory 20 $46.00
Mar. 3 Purchase 400 $49.00
Mar. 23 Purchase 80 $51.00

The company sold 485 units of inventory during the month. Ending inventory assuming Weighted Average would be
$___________

Use the following for questions 39 & 40

The company provided the following data:

Beginning inventory $50,000

Purchases 600,000
Gross profit 402,000
Net sales 995,000
Sales 1,004,000

39. What was the company’s ending inventory? $_________

40. What was the company’s gross profit ratio (1 decimal place) __ __.__ %

Chapter 6 Page 6-6

 Chapter 7 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 4

The company purchased land as a factory site. An old building on the property was demolished, and construction
began on a new building. Costs incurred during the first year are listed below:

Land purchased as a factory site $800,000

Property taxes on land (past due for last year) 2,000
Property taxes on land (for the next year) 6,000
Title investigation of land 12,000
Architect fees (for new building) 30,000
Demolition of old building 20,000
Sale of salvaged materials 5,000
Building construction costs 1,500,000
Interest cost related to the construction 80,000

1. $__________How much of the “property taxes on the land for the next year” should be capitalized to the Land
account?

2. How should the “sale of salvaged materials” be recorded?

A. As an added cost of the land
B. As a reduction of the cost of the land
C. As an added cost to the building
D. As a reduction of the cost of the building

3. $___________What amount should be recorded to the Land account?

4. $___________What amount should be recorded to the Building account?

Use the following to answer questions 5 – 15 (Straight Line, Double declining balance and Activity Based)
The company purchased a new semi-trailer truck for an acquisition cost of $250,000. The company estimates the
truck will have a residual value of $75,000 when they are done using it at the end of 5 years or about 700,000
miles.
Answer 5 – 8 based on Straight line depreciation

5. $__________ Year 2 depreciation expense

6. $___________ Book value at the end of year 2
7. $____________ Accumulated depreciation for year 3

Chapter 7 Page 7-1

8. $____________Book value at the end of year 3
Answer 9 – 13 based on 150% Declining Balance

9. $__________ Year 2 depreciation expense

10. $____________ Accumulated depreciation for year 2

11. $____________Book value at the end of year 2

12. $__________ Year 3 depreciation expense

13. $__________ Year 4 depreciation expense

Answer 14 and 15 based on Activity based

As stated above, the company purchased a new semi-trailer truck for an acquisition cost of $250,000. The
company estimates the truck will have a residual value of $75,000 when they are done driving it 700,000 miles.
For the past three years the company used the truck as follows:
Year Activity (miles)
1 145,000
2 141,000
3 138,000
Total 424,000

14. Under activity based depreciation; what is the amount of depreciation expense they would have recorded for
year 3? $___________________

15. Under activity based depreciation; what is the book value at the end of year 3? $_______________________

16. $___________ During the first two years, the company drove the truck 67,000 in year 1 and 88,000 miles in
year 2, to deliver merchandise to its customers. The company originally purchased the truck for $100,000. If the
truck has an estimated life of 5 years or 350,000 miles, with an estimated residual value of $30,000, what amount
of depreciation expense should the company record in the second year using the activity-based method?

Chapter 7 Page 7-2

17. $_____________ The company purchased equipment at the beginning of Year 1 for $200,000. In Years 1 -4,
the company depreciated the asset on a straight-line basis with an estimated useful life of 8 years and a $20,000
residual value. What is the BOOK VALUE of the equipment at the end of year 4?

Use the following to answer questions 18 – 19

The company purchased equipment for $300,000 on January 1, year 1. The equipment is expected to have a 5-year
life, with a residual value of $60,000 at the end of its service life.

18. $___________ Using the double declining balance method, determine book value at the end of year 2.

19. $____________ Using the straight-line method, determine book value at the end of year 2.

Use the following to answer questions 20 - 22

The company is in the process of closing its operations. It sold its 7-year-old Front-end loader for $70,000. The
loader originally cost $200,000 and had an estimated useful life of 10 years and an estimated residual value of
$25,000. The company uses straight-line depreciation for all equipment.

20. $___________Calculate the book value of the loader at the end of the 7th year.

21. $___________What was the gain or loss on the sale of the loader at the end of the 7th year; (if loss, put – in
front of your answer)?

22. $___________ Assume instead the company had originally estimated the Equipment had an estimated useful
life of 8 years instead of 10 years. What would be the gain or loss on the sale of the loader at the end of the
7th year (if loss, put – in front of your answer)?

Chapter 7 Page 7-3

Use the following to answer questions 23 - 30
The company reported the following income statement results:

Sales $875,000
Sales returns & allowances 15,000
Gross profit 399,900
Operating expense 270,000
Gain on sale of equipment 20,000
Net income 115,240

23. $____________Calculate Net sales

24. $____________ Calculate Cost of Goods Sold

25. $____________ Calculate operating income

26. $____________Calculate Income before Income tax (IBT)

27. $____________ Calculate income tax expense

28. ___ ___. ___%. Calculate the gross profit margin (one decimal place)

29. ___ ___.___%. Calculate the profit margin (one decimal place)

30. $______________Assume the company had a $5,000 LOSS (instead of the $20,000 gain) on the sale of
equipment, determine IBT.

Use the following to answer questions 31 – 32

Last year the company had the following expenditures related to developing its trademark:

General advertising costs $150,000

Advertising specifically focused on trademark 25,000
Legal fees to register trademark 10,000
Legal fees for successful defense of new trademark 60,000
Total $245,000

During your year-end review of the accounts related to intangibles, you discover that the company has capitalized
all the above as costs of the trademark. Management contends that all the costs increase the value of the
trademark and, therefore, should be capitalized.

31. Which of the above costs should NOT be capitalized?

32. $___________ What is the total cost that should be capitalized to the trademark account?

Chapter 7 Page 7-4

 Chapter 8 Homework
Submit your answers in CANVAS before it is due

Use the following to answer questions 1 – 5

Select the correct reporting method for each of the items listed below: Reporting Method
A. Current Liability
1. _____ Notes payable due in eleven months. B. Long term liability
C. Disclosure note only
2. _____ Commercial paper issued by the company. D. Not reported

3. _____ A contingent liability that is reasonably possible of occurring and cannot be estimated.

4. _____ Customers paid for services in advance.

5. _____ Current portion of long-term debt.

Use the following to answer questions 6 – 10

On October 1, 2024, the company borrows $500,000 cash from the bank to expand operations. The company
signs a 1 year, 9% promissory note. The company’s year-end is December 31.

6. How was the loan classified on the company’s December 31, 2024 balance sheet?
A. Current liability
B. Long term liability
C. Note disclosure only
D. Stockholders’ Equity

7. How was the loan classified on the company’s December 31, 2024 statement of cash flow?
A. Operating activity
B. Investing activity
C. Financing activity
D. Not shown on the statement of cash flows

8. $_________ How much interest should be accrued on December 31, 2024 (assume no previous entry was
recorded for interest on the loan)?

9. $______________When the note is paid at maturity (September 30, 2025) how much cash is paid to the
bank?

10. $_________ When the note is paid at maturity in the second accounting year, how much does net income
decrease?

Use the following to answer questions 11 – 13

On July 1st company borrows $100,000 by issuing a one-year note compounding annually. Interest is payable at
maturity.

11. $___________Determine the amount of interest expense that should be recorded in a year-end adjusting
entry assuming an 8% interest rate and a fiscal year-end September 30.

12. $___________Determine the amount of interest expense that should be recorded in a year-end adjusting
entry assuming a 7% interest rate and a fiscal year-end December 31.

Chapter 8 Page 8-1

13. $___________Determine the amount of interest expense that should be recorded in a year-end adjusting
entry assuming a 6% interest rate and a fiscal year-end March 31.

Use the following to answer questions 14 – 18

You have been working at a local distributor. Your bi-weekly salary is $2,100. Your average income tax rate is 15%
plus FICA taxes at 7.65%. Your employer provides health insurance to you which costs your employer $350 per pay
and costs you $25 per pay (assume this is after tax). Determine the following based on your pay (assume you have
already made more than $7,000 this year so that unemployment taxes do not apply).

14. $___________ How much will your employer withhold from your paycheck for federal income taxes?

15. $________.____ How much will your employer withhold from your paycheck for FICA taxes?

16. $__________.____ How much will your employer direct deposit into your bank account for your pay?

17. $_________.___What is your total cost to your employer for the bi-weekly pay period?

18. $__ __.__ __ If you work 80 hours bi-weekly, what is the average hourly cost to your employer for your
services? (round to two decimal places)

Use the following to answer questions 19 – 24

The following information is from the company’s 12/31 balance sheet, listed in alphabetical order:
Accounts payable $30,000 Inventory $450,000
Accounts receivable 35,000 Land 500,000
Automobiles, net 400,000 Long-term investment 100,000
Bond payable 1,500,000 Notes payable, due 11 months 75,000
Buildings, net 1,200,000 Patents 40,000
Common stock 600,000 Payroll taxes payable 12,000
Cash 40,000 Prepaid expenses 18,000
Income tax payable 60,000 Retained earnings 459,000
Interest payable 50,000 Supplies 3,000

19. $__________. How much are the current assets?

20. $__________. How much are the total assets?

21. $_________. How much are the current liabilities?

22. $_________. How much are the total liabilities?

23. $_________. How much is the total stockholders’ equity?

Chapter 8 Page 8-2

24. __.__ __ What is the current ratio, (round to two decimal places)?
Use the following to answer questions 25 – 27

You want a new car. At the dealership, you find a car that you like. The dealership gives you two payment options:

1. Pay $23,000 in cash for the car today…OR

2. Pay $370.41 every month (at the end of each month) for six years at 5%.

25. $__________.__ __How much CASH (in total) will you end up paying if you choose to make monthly
payments for the car?

26. $__________.__ __How much interest (in total) will you pay if you choose to make payments instead of
paying cash for the car today?

27. $_____. __ __How much interest has accrued by the time the first car payment is due (round to two decimal
places)?

Use the following to answer questions 28 - 33

The company reports the following income statement results:

Sales $750,000
Operating expense 250,000
Net income 105,000
Sales returns & allowances 10,000
Gross profit 390,000
Interest expense 5,000

28. $____________Calculate Net sales:

29. $____________Calculate Cost of Goods Sold

30. $____________Calculate operating income

31. $_____________Calculate Income before Income tax (IBT)

32. ___ ___.___%. Calculate the gross profit ratio (one decimal place)

33. ___ ___.___%. Calculate the profit margin (one decimal place)

Chapter 8 Page 8-3

 TVM Homework
Submit your answers in CANVAS before it is due

USE BAII Plus Financial Calculator or the Factor Table found in Canvas Modules to solve the TVM
questions.

Use the following to answer questions 1 - 4 (round to nearest whole dollar)

An amount is invested today and will remain invested for the next five years. Determine the amount
the investment will accumulate over the 5-year period based on the different compounding periods.

Investment
Interest
amount Compounding
rate
today
A $15,000 9.0% Annual
B $15,000 9.0% Semiannually
C $15,000 9.0% Quarterly
D $15,000 9.0% Monthly

1. $__________ Determine the accumulated investment amount for investment A for the 5-year period
(round to nearest dollar)?

2. $___________ Determine the accumulated investment amount for B for the 5-year period (round to
nearest dollar)?

3. $__________ Determine the accumulated investment amount for C for the 5-year period (round to
nearest dollar)?

4. $__________Determine the accumulated investment amount for D for the 5-year period (round to
nearest dollar)?

TVM Page TVM-1

Which investment yields a higher future value? A, B, C or D?
Use the following to answer questions 5 - 8 (round to nearest whole dollar)
The four actors below have just signed a contract to star in a comedy. Each person signs independent
contracts with the following terms:
Contract
How contract is paid
amount
Actor 1 $1,125,000 Lump sum in 3 years
Actor 2 1,200,000 Lump sum in 4 years
Actor 3 375,000 Every year for 3 years
Actor 4 300,000 Every year for 4 years

Assume an annual discount rate of 12% (compounded annually).

5. $_________What is the value of Actor 1’s contract today (round to nearest dollar)?

6. $_________ What is the value of Actor 2’s contract today (round to nearest dollar)?

7. $_________ What is the value of Actor 3’s contract today (round to nearest dollar)?

8. $_________ What is the value of Actor 4’s contract today (round to nearest dollar)?

9. $_____________You would like to start saving for retirement. Assuming you are now 22 years old
and you want to retire at age 60, you have 38 years to watch your investment grow. You decide to
invest $275 at the end of each month for the next 38 years (456 months). This investment will earn
9% per year into the future. Calculate your accumulated investment at the end of 38 years. (Round
to nearest whole dollar)

TVM Page TVM-2

10. $_________You want to buy a $35,000 car today, but you don’t have the cash to buy it. The
dealership is offering to loan you the money at 6% interest with payments made monthly for the next six
years. If you choose to buy the car, what is your monthly car payment (round to nearest dollar)?

11. $_________You want to start saving now so you have cash to buy a $35,000 car in six years. You can
earn 6% interest on your monthly payments. How much must you save each month to achieve your
$40,000 goal in 6 years (round to nearest dollar)?

12. $_________ You decide to save $400 every month for the next five years so you can start a small
business. You are investing the money and can earn 12%. How much will you have saved by the end of
the five years (round to nearest dollar)?

13. $_________You won $50,000, after taxes have been taken out, from a scratch-off lottery ticket. You
decide to invest the money, so you have a down payment for a home in 3 years. Your expected annual
return is 10%; how much will you have for a down payment in 3 years (round to nearest dollar)?

TVM Page TVM-3

Use the following to answer 14-18
You are planning on investing $1,200 every year for the next 7 years. You can earn 9% on your
investment. The following are your options for investing the money.

Option Investment amount Frequency

1 $100 Monthly
2 $300 Quarterly
3 $600 Semi-annually
4 $1,200 Annually

14. $_________What is the value of your investment if you select option 1 (round to nearest dollar)?

15. $_________What is the value of your investment if you select option 2 (round to nearest dollar)?

16. $_________What is the value of your investment if you select option 3 (round to nearest dollar)?

17. $_________What is the value of your investment if you select option 4 (round to nearest dollar)?

18. ____ Which of the above is your best investing option?

Use the following to answer 19 – 20:

You are going to receive a $20,000 scholarship at the end of 3 years for graduate school.

19. $_________ How much must the scholarship fund invest today so it has the money to pay you in 3
years if it can earn 8% compounded semi-annually (round to nearest dollar)?

20. $_________ How much must the scholarship fund invest today so it has the money to pay you in 3
years if it can earn 8% compounded quarterly (round to nearest dollar)?

TVM Page TVM-4

Use the following to answer questions 21-25

The company reports the following amounts in its year-end income statement:

Net sales $700,000 Cost of goods sold $310,000

Advertising expense 100,000 Sales discounts 3,000
Utilities expense 20,000 Salaries expense 200,000
Effective income tax rate 25% Interest expense 2,000

21. $____________Determine gross profit

22. $____________Determine operating expenses

23. $____________Determine Income tax expense

24. ___ ___.___% Calculate the gross profit ratio (round to one decimal place).

25. ___.___% Calculate the profit margin (round to one decimal place).

TVM Page TVM-5

 Chapter 9 Homework
Submit your answers in CANVAS before it is due
USE THE PV Factor Tables (located in Canvas Module “Files”) or the TI BAII Plus Financial Calculator to answer the
following questions relating to the time value of money.

Use the following to answer questions 1 – 3 (Round answers to the nearest dollar)
The company issues 12%, 10-year bonds with a total face amount of $100,000. The market interest rate for bonds of
similar risk and maturity is 11.6%. Interest is paid semi-annually. DO NOT ROUND YOUR ANSWERS UNTIL YOU FULLY
COMPLETE THE PROBLEM SET.

1. $___________Determine the semi-annual interest payment for this bond

2. $___________ (rounded to nearest dollar). What is the present value of these interest payments?

3. $___________ (rounded to nearest dollar). What is the issue price of the bond?

Use the following to answer questions 4 – 7 (Round answers to the nearest dollar)
The company issues 10%, 5-year bonds with a total face amount of $100,000. The market interest rate for bonds of
similar risk and maturity is 10.2%. Interest is paid semi-annually. DO NOT ROUND YOUR ANSWERS UNTIL YOU FULLY
COMPLETE THE PROBLEM SET (input your answers after you’ve completed the entire problem).

4. $___________ (rounded to nearest dollar). What is the issue price of the bond?

5. $___________ (rounded to nearest dollar). When the company records the first interest payment, how much will
the company record for interest expense?

6. $___________ (rounded to nearest dollar). What is the bond liability (carrying amount) after the first interest
payment?

7. $___________ (rounded to nearest dollar). When the company records the second interest payment, how much
will the company record for interest expense?

Use the following to answer questions 8 – 10 (Round answers to the nearest dollar)

The company issues 9%, 10-year bonds with a total face amount of $100,000. The market interest rate for bonds of
similar risk and maturity is 9%. Interest is paid semiannually.

8. $___________ What is the issue price of the bond?

Chapter 9 Page 9-1

9. $___________. When the company records the 2nd interest payment, how much will the company record for
interest expense?

10. $___________. What is the bond liability (carrying amount) after the 2nd interest payment?

Use the following to answer questions 11 – 15

The company issues 7.0%, 20-year bonds with a face amount of $500,000 for $489,568.69. The market interest rate for
bonds of similar risk and maturity is 7.2%. Interest is paid annually.

11. $___________Determine the interest payment.

12. $____________ (rounded to nearest dollar). Determine interest expense for the first interest payment.

13. What will happen to interest expense each interest payment? (Increase, decrease, remain constant)

14. What will happen to the bond liability (carrying value) each interest payment? (Increase, decrease, remain
constant).

15. $___________When the bond matures in 20 years after all the interest payments have been made, how much will
the company pay bondholders?

16. $_____________(rounded to nearest dollar) A ten year bond issue with a face amount of $100,000 bears interest
at the rate of 8.5%. The current market rate of interest is 8.6%. Determine the issue price of this annual bond.

17. Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each
matures in 10 years. Bond X pays 8% interest while Bond Y pays 7% interest. The current market rate of interest is
7%. Which of the following is correct?
a. Both bonds will sell for the same amount.
b. Bond X will sell for more than Bond Y.
c. Bond Y will sell for more than Bond X.
d. Both bonds will sell at a premium.

18. Given the information below, which bond(s) will be issued at a premium?

Bond 1 Bond 2 Bond 3 Bond 4

Stated Rate of Return 6% 4% 8% 7%
Market Rate of Return 7% 3% 8% 5%

19. _____% The company issues 8.4%, 10-year bonds with a face amount of $1,000,000 on January 1, 20A for
$1,000,000. Interest is paid semiannually on June 30 and December 31. What was the market interest rate for
the bond issuance?
Use the following to answer questions 20 – 24

Chapter 9 Page 9-2

On January 1, year 1, The company borrows $45,000 to purchase a new vehicle by agreeing to a 9.0%, 5-year loan with
the bank. Payments are due at the end of each month with the first installment (vehicle payment) due on January 31,
year 1. After completing the problem, ROUND YOUR ANSWERS TO THE NEAREST DOLLAR.

20. Determine the monthly vehicle payment (installment) $_________

21. Determine the interest expense for the first car payment $_________

22. How much of the payment will decrease the amount owed (principal)? $___________

23. After the first vehicle payment is made the amount owed on the vehicle would be: $____________

24. Determine interest expense for the second car payment $_________

Use the following to answer questions 25 – 27

On January 1, year 1, the company borrows $34,000 to purchase a new vehicle by agreeing to a 6%, 6-year note with
the bank. Payments of $563.48 are due at the end of each month with the first installment due on January 31, year 1.
ROUND YOUR ANSWERS TO THE NEAREST CENT (2 decimal places).

25. After the first car payment (installment) is made the amount owed on the vehicle would be: $_________.__ __

26. Determine interest expense for the second car payment $______.__ __

27. After the Company pays all of the car payments, how much do they owe at the end of the 5 years? $______

REVIEW: Use the following to answer questions 28 – 32

The company reports the following income statement results:

Gross profit $414,720

Interest revenue 5,000
Sales discounts 8,000
Net Sales 960,000
Operating expense 350,000
Effective tax rate 10%

28. $____________Calculate Sales.

29. $____________Calculate Income before Income tax (IBT).

30. $____________Calculate net income.

31. ___ ___.___% Calculate the gross profit margin (one decimal place)

32. __. __ __ % Calculate the profit margin (two decimal places)

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 Chapter 10 Homework
Submit your answers in CANVAS before it is due
Match the following terms with their definitions (not every letter is used)
1. Outstanding stock
2. Paid-in Capital
3. Retained earnings
4. Treasury stock
5. Issued stock
a. The earnings not paid out in dividends.
b. Shareholders can lose no more than the amount they invested in the company.
c. The corporation’s own stock that is reacquired.
d. The amount invested by stockholders.
e. Total number of shares available to sell.
f. Shares can be returned to the corporation at a predetermined price.
g. Shares held by investors.
h. Shares receive priority for future dividends, if dividends are not paid in a given year.
i. Shares actually sold.

Use the following to answer questions 6 – 12

The company has two classes of stock authorized: $100.00 par preferred and $0.10 par value common. As of the
beginning of 20XC, 2,500 shares of preferred stock and 150,000 shares of common stock have been issued.
Record the following transactions to complete the Statement of Stockholders’ Equity:
Effect on Stockholders’ Equity
Issue 500 additional shares of preferred
1-Mar
stock for $103.00 per share
Issue 10,000 additional shares of common
1-Apr
stock for $18 per share
Declare a cash dividend on both common
1-Jun and preferred stock of $0.50 per share to
all stockholders of record on June 15.
30-Jun Pay the cash dividend declared on June 1.
Repurchase 5,000 shares of common
1-Aug
treasury stock for $20.00 per share
Reissue 2,000 shares of treasury stock
1-Oct
purchased on August 1 for $23.00 per share
31-Dec Net income for the year was $400,000
The beginning balances are shown below. Complete the Statement of Stockholders’ Equity using the above information:

Additional Total
Preferred Common Paid-in Retained Treasury Stockholders'
Stock Stock Capital Earnings Stock Equity
Beginning balance 20XC $250,000 $15,000 $2,085,000 $800,000 $0 $3,150,000
Issuance of stock
Net income for the year
Less: Dividends
Purchase of Treasury
Sale of Treasury
Ending balance 20XC
Then answer the following questions:
6. $____________ When the shares were issued on March 1, how much did additional paid in capital increase?

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7. $______________On June 1st when the dividend was declared, how much did retained earning decrease?

8. $__________ On August 1st when the shares were repurchased, how much did stockholders’ equity decrease?

9. $____________ On August 1st when the shares were repurchased, how much did net income decrease?

10. $____________On October 1st when the shares were reissued, how much did additional paid in capital change (if
decrease put “-“ in front of the number)?

11. $______________Compute ending retained earnings on December 31st.

12. $______________Compute ending stockholders equity on December 31st.

Use the following to answer questions 13 - 17

The company’s management is considering either a 100% stock dividend or a 2-for-1 stock split.

Complete the following chart to assist in answering the following:

After 100% After 2-for-1
Before Stock Dividend Stock Split
Common stock, $0.20 par value $10,000
Additional paid-in capital 1,490,000
Total paid-in capital 1,500,000
Retained Earnings 700,000
Total stockholders’ equity $2,200,000

Shares outstanding 50,000

Par value per share $0.20
Share price $100.00

13. $______________ After the 100% stock dividend what amount is in Total paid-in capital account?

14. $______________After the 100% stock dividend what amount is in the retained earnings account?

15. $____.___ ___After the 100% stock dividend what is the par value per share?

16. $_______________After the 2-for-1 stock split what amount is in Total paid in capital account?

17. $____.___ ___ After the 2-for-1 stock split what is the par value per share?

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Use the following to answer questions 18 - 22
The Company
Balance Sheet
(Stockholders’ Equity Section)
At December 31, 2024

Preferred stock, $100 par value $100,000

Common stock, $0.25 par value 75,000
Additional Paid in capital 4,726,000
Total paid in capital 4,901,000
Retained earnings 1,150,000
Treasury stock (340,000)
Total stockholders' equity $5,711,000

18. ________shares. How many shares of preferred stock have been issued?

19. _______________shares. How many shares of common stock have been issued?

20. $___________ If the common stock were issued at an average price of $16 per share. What amount of the
Additional Paid in capital is from the common stock issuance?

21. $___________If retained earnings at the beginning of the period was $900,000 and Net income was $400,000,
what were the declared dividends for the year?

22. _________shares. If the treasury stock was reacquired at $17.00 per share, how many shares were reacquired?

Use the following to answer questions 23 - 26

The company was organized on January 3, 20XE. The firm was authorized to issue 1,000,000,000 shares of $1.00 par
common stock. During 20XE, the company had the following transactions relating to shareholders' equity:

Per share Shares Total

Issued common stock (January) $25.00 300,000
Issued common stock (July) $27.00 400,000
Outstanding shares 690,000
Dividends declared $0.60
Treasury stock $20.00
Net income for the year $600,000

23. $__________________What is total Paid-in capital at the end of 20XE?

24. $__________________What is the additional paid-in capital at the end of 20XE?

25. $__________________What is total retained earnings at the end of 20XE?

26. $__________________What is total stockholders’ equity at the end of 20XE?

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Use the following to answer questions 27 – 34
The company reports the following amounts in its December 31, 20XF income statement:

Sales $955,000 Advertising expense $75,000

Net sales 950,000 Salaries expense 200,000
income tax expense 37,450 Cost of goods sold 479,750
Sales returns 5,000 Utilities expense 20,000
Gain on sale of equipment 12,000 Average shares outstanding 45,000

27. $____________Determine gross profit:

28. $____________Determine operating expenses:
29. $____________Determine Income before income taxes (IBT):
30. $____________Determine net income:
31. ___ ___. ___ %. Calculate gross profit ratio (one decimal place)
32. __ __ . __ %. Calculate the profit margin (one decimal place)
33. $____.__ __Calculate Earnings per Share (two decimal places)
34. $____________If ending inventory consisted of $32,000 and beginning inventory was $40,000 how much
inventory was purchased during the year?

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