To determine: Finding the recent 10Q (quarterly) and 10K (annual) forms,
Introduction:
The
The cost of debt is the effective interest rate of cost which a business earns on their current debts. Debt involves in the formation of capital structure. As the debt is considered as deduction expenditure, the cost of debt is usually determined as after-tax cost in order to formulate similar to the cost of equity.
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- The Daily Corporation, a company whose securities are publicly traded, prepares monthly, quarterly, and annual financial statements for internal use but disseminates to external users only the annual financial statements. Agree or Disagree with the above statement?arrow_forwardYou are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…arrow_forwardYou are engaged to perform the first audit of the Torrents Company for the year ended December 31, 2022. You find the following account balances related to shareholders' equity: Preference shares, P100 par P3,000,000 Ordinary Shares, P10 par 6,500,000 Capital Surplus (1,640,000) Retained Earnings 15,000,000 Due to the antiquated terminology and negative balance, you examine the Capitak Surplus account first and find in it the following entries: Credit/(Debit) Premium on Ordinary Shares P2,710,000 Capital from donated land 1,600,000 Treasury shares (50,000 ordinary shares at cost) (750,000) Premium on Preference Shares 300,000 Appropriation for contingencies 2,500,000 Share dividend issued (50%) (2,000,000) Prior period adjustment (net of income taxes) (1,200,000) Loss from the fire (uninsured), 2022 (1,800,000) Property dividend distributed (600,000) Cash dividends declared to be paid in 2023 (2,400,000) Balance (P1,640,000) Your examination of…arrow_forward
- Parkman Sporting Goods is preparing its annual report for its 2021 fiscal year. The company’s controller has asked for your help in determining how best to disclose information about the following items:1. A related-party transaction.2. Depreciation method.3. Allowance for uncollectible accounts.4. Composition of investments.5. Composition of long-term debt.6. Inventory costing method.7. Number of shares of common stock authorized, issued, and outstanding.8. Employee benefit plans.Required:Indicate whether the above items should be disclosed (A) in the summary of significant accounting policies note, (B) in a separate disclosure note, or (C) on the face of the balance sheet.arrow_forwardAn annual report Must be audited by the IRS. Is delivered to stockholders and the public on the last day of the fiscal year. Includes comparative financial statements for several years. Must be filed with the SEC by all companies in the United States.arrow_forwardThe controller of Red Lake Corporation has requested assistance in determining income, basic earnings per share, and diluted earnings per share for presentation on the companys income statement for the year ended September 30, 2020. As currently calculated, Red Lakes net income is 540,000 for fiscal year 2019-2020. Your working papers disclose the following opening balances and transactions in the companys capital stock accounts during the year: 1. Common stock (at October 1, 2019, stated value 10, authorized 300,000 shares; effective December 1, 2019, stated value 5, authorized 600,000 shares): Balance, October 1, 2019issued and outstanding 60,000 shares December 1, 201960,000 shares issued in a 2-for-l stock split December 1, 2019280,000 shares (stated value 5) issued at 39 per share 2. Treasury stockcommon: March 3, 2020purchased 40,000 shares at 38 per share April 1, 2020sold 40,000 shares at 40 per share 3. Noncompensatory stock purchase warrants, Series A (initially, each warrant was exchangeable with 60 for 1 common share; effective December 1, 2019, each warrant became exchangeable for 2 common shares at 30 per share): October 1, 201925,000 warrants issued at 6 each 4. Noncompensatory stock purchase warrants, Series B (each warrant is exchangeable with 40 for 1 common share): April 1, 202020,000 warrants authorized and issued at 10 each 5. First mortgage bonds, 5%, due 2029 (nonconvertible; priced to yield 5% when issued): Balance October 1, 2019authorized, issued, and outstandingthe face value of 1,400,000 6. Convertible debentures, 7%, due 2036 (initially, each 1,000 bond was convertible at any time until maturity into 20 common shares; effective December 1, 2019, the conversion rate became 40 shares for each bond): October 1, 2019authorized and issued at their face value (no premium or discount) of 2,400,000 The following table shows the average market prices for the companys securities during 2019-2020: Adjusted for stock split Required: Prepare a schedule computing: 1. the basic earnings per share 2. the diluted earnings per share that should be presented on Red Lakes income statement for the year ended September 30, 2020 A supporting schedule computing the numbers of shares to be used in these computations should also be prepared. Assume an income tax rate of 30%.arrow_forward
- Situation You are the assistant accountant for Tyler Corporation. It is mid-January 2020 and you are helping to prepare Tylers balance sheet for December 31, 2019. Tyler will publish this balance sheet on March 1, 2020, after the auditors have completed their work. Tyler has a 100,000 note payable that was issued in 2018 and that is due March 6, 2020. On January 5, 2020, Tyler sold 2,000 shares of its 10 par common stock for 80,000. Its intent is to use these proceeds (plus 20,000 cash it already has on hand) to repay the note payable on March 6. The head accountant says Im not sure how to classify the 100,000 note payable on the December 31, 2019, balance sheet. Check this out for me. Directions Research the related generally accepted accounting principles and prepare a short memo to the head accountant that explains how Tyler should report the 100,000 note payable on its December 31, 2019, balance sheet.arrow_forwardYou are an accountant working for a company that has recently decided to incorporate. The company has incurred $4,300 for attorneys fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on March 13, assuming they are paid in cash?arrow_forwardYou are an accountant working for a manufacturing company that makes personal care products and has recently decided to incorporate. The company incurred a total of $7,900 for attorneys fees, promotion costs, and filing fees with the state of incorporation as a part of organizing the corporate entity. What is the journal entry to record these costs on February 28, assuming they are paid in cash?arrow_forward
- In the audit of A Corporation’s financial statements at December 31, 2025, the chief accountant of the staid corporation provided the following information: Notes payable: Arising from purchase of goods 304,000 Arising from 5 year-bank loans, on which marketable securities valued at P600,000 have been pledged as security, P400,000 due on June 30, 2026; P100,000 due on Dec. 31, 2026 500,000 Arising from advances by officers, due June 30, 2026 50,000 Reserve for general contingencies 400,000 Employees’ income tax withheld 20,000 Advances received from customers on purchase orders 64,000 Containers’ deposit 50,000 Accounts payable arising from purchase of goods, net of debit balances of P40,000 170,000 Cash dividends payable 80,000 Stock dividend payable 100,000 Dividends in arrears on preferred stock, not yet declared 200,000 Convertible bonds, due January…arrow_forwardYou are engaged to audit the financial statements of Sailor Co. The balance sheet below is provided to you:Sailor Co.Balance SheetDecember 31, 2021ASSETS LIABILITIES AND CAPITALCash 290,000.00 Accounts payable 190,000.00 Accounts receivable 139,000.00 Notes payable 83,500.00 Notes receivable 200,000.00 Ordinary share capital 300,000.00 Inventory 357,000.00 Retained earnings 412,500.00 Total 986,000.00 Total 986,000.00 The records of Sailor Co. were reviewed. The following errors were discovered. These errors were not corrected until the current year under audit.a. On July 1, 2019, Sailor paid P150,000 for a 5-year insurance policy. The amount was debited to Insurance Expense when paid.b. Sailor Co. failed to record unearned rent revenue of P16,000 and P9,000 in 2018 and 2020, respectively.c. Sailor Co. also failed to recognize accrued expenses of P23,000, P18,000 and P7,000 for 2018, 2019 and 2020, respectively.d. On December 31, 2019, Sailor Co. bought equipment worth P150,000 and…arrow_forwardYou are engaged to audit the financial statements of Sailor Co. The balance sheet below is provided to you:Sailor Co.Balance SheetDecember 31, 2021ASSETS LIABILITIES AND CAPITALCash 290,000.00 Accounts payable 190,000.00 Accounts receivable 139,000.00 Notes payable 83,500.00 Notes receivable 200,000.00 Ordinary share capital 300,000.00 Inventory 357,000.00 Retained earnings 412,500.00 Total 986,000.00 Total 986,000.00 The records of Sailor Co. were reviewed. The following errors were discovered. These errors were not corrected until the current year under audit.a. On July 1, 2019, Sailor paid P150,000 for a 5-year insurance policy. The amount was debited to Insurance Expense when paid.b. Sailor Co. failed to record unearned rent revenue of P16,000 and P9,000 in 2018 and 2020, respectively.c. Sailor Co. also failed to recognize accrued expenses of P23,000, P18,000 and P7,000 for 2018, 2019 and 2020, respectively.d. On December 31, 2019, Sailor Co. bought equipment worth P150,000 and…arrow_forward
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