Financial and Managerial Accounting - With CengageNow
14th Edition
ISBN: 9781337577809
Author: WARREN
Publisher: CENGAGE L
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Chapter 14, Problem 14.8EX
A.
To determine
Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.
To list: The errors in the determination of the three measures of current position analysis.
B.
To determine
Whether company satisfies the terms of the bond indenture
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The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows:
Please see the attachment for details:
a. List the errors in the determination of the three measures of current position analysis.b. Is the company satisfying the terms of the bond indenture? Explain.
Analyzing and Reporting Financial Statement Effects of Bond Transactions
On January 1 of the current year, Shields Inc. issued $700,000 of 9%, 20-year bonds for $769,275, yielding a market (yield) rate of 8%. Semiannual interest is payable on June 30 and December 31 of each year.
a. Show Excel inputs to confirm the bond issue price.
Note: Round your answer to two decimal places.
rate=
nper
pmt
FV =>
Answer = $
b. Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payment and premium amortization on June 30 of the current year, and (3) semiannual interest payment
and premium amortization on December 31 of the current year.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
Note: Round your answers to the nearest whole dollar.
Balance Sheet…
The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows:
1.
Current assets:
Cash
$102,000
Temporary investments
48,000
Accounts and notes receivable (net)
120,000
Merchandise inventory
36,000
Prepaid expenses
24,000
Intangible assets
124,800
Property, plant, and equipment
55,200
Total current assets (net)
$510,000
Current liabilities:
Accounts and short-term notes payable
$96,000
Accrued liabilities
204,000
Total current liabilities
300,000
Working capital
$210,000
2.
Current ratio
1.7
$510,000
÷
$300,000
3.
Quick ratio
1.2
$115,200
÷
$96,000
a. Find the errors in the determination of the…
Chapter 14 Solutions
Financial and Managerial Accounting - With CengageNow
Ch. 14 - Prob. 1DQCh. 14 - What is the advantage of using comparative...Ch. 14 - A companys current year net income (after income...Ch. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 14.1BECh. 14 - Vertical analysis Income statement information for...Ch. 14 - Prob. 14.3BECh. 14 - Accounts receivable analysis A company reports the...Ch. 14 - Inventory analysis A company reports the...Ch. 14 - Long-term solvency analysis The following...Ch. 14 - Times interest earned A company reports the...Ch. 14 - Asset turnover A company reports the following:...Ch. 14 - Prob. 14.9BECh. 14 - Common stockholders' profitability analysis A...Ch. 14 - Earnings per share and price-earnings ratio A...Ch. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - Vertical analysis of income statement The...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Vertical analysis of balance sheet Balance shed...Ch. 14 - Horizontal analysis of the income statement Income...Ch. 14 - Current position analysis The following data were...Ch. 14 - Prob. 14.7EXCh. 14 - Prob. 14.8EXCh. 14 - Prob. 14.9EXCh. 14 - Prob. 14.10EXCh. 14 - Inventory analysis The following data were...Ch. 14 - Prob. 14.12EXCh. 14 - Ratio of liabilities to stockholders' equity and...Ch. 14 - Prob. 14.14EXCh. 14 - Prob. 14.15EXCh. 14 - Prob. 14.16EXCh. 14 - Profitability ratios The following selected data...Ch. 14 - Profitability ratios Ralph Lauren Corporation...Ch. 14 - Six measures of solvency or profitability The...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Prob. 14.21EXCh. 14 - Prob. 14.22EXCh. 14 - Prob. 14.23EXCh. 14 - Prob. 14.24EXCh. 14 - Prob. 14.25EXCh. 14 - Comprehensive Income Anson Industries, Inc....Ch. 14 - Horizontal analysis of income statement For 20V2,...Ch. 14 - Prob. 14.2APRCh. 14 - Prob. 14.3APRCh. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Prob. 14.5APRCh. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Prob. 14.2BPRCh. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency and profitability...Ch. 14 - Prob. 14.5BPRCh. 14 - Financial Statement Analysis The financial...Ch. 14 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 14 - Prob. 2ADMCh. 14 - Prob. 3ADMCh. 14 - Prob. 14.1TIFCh. 14 - Prob. 14.3TIF
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