E10-5 Computing Issue Prices of Bonds for Three Cases LO2, 3, 4

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James Corporation is planning to issue $502,000 worth of bonds that mature in 6 years and pay 7 percent interest
each June 30 and December 31. All of the bonds will be sold on January 1, 2011. (Use Table 5, Table 6)
Required:
Compute the issue (sale) price on January 1, 2011, for each of the following independent cases:
a. Case A: Market (yield) rate, 5 percent. (Round "PV Factors" to 4 decimal places, intermediate and final
answer to the nearest dollar amount. Omit the "$" sign in your response.)
Issue price $
b. Case B: Market (yield) rate, 7 percent. (Round "PV Factors" to 4 decimal places, intermediate and final
answer to the nearest dollar amount. Omit the "$" sign in your response.)
Issue price $
c. Case C: Market (yield) rate, 9 percent. (Round "PV Factors" to 4 decimal places, intermediate and final
answer to the nearest dollar amount. Omit the "$" sign in your response.)
Issue price $

P11-3 Recording Transactions Affecting Stockholders' Equity LO3, 7

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King Corporation began operations in January 2011. The charter authorized the following capital stock:
Preferred stock: 10 percent, $13 par, authorized 41,800 shares
Common stock: $8 par, authorized 87,000 shares
During 2011, the following transactions occurred in the order given:
a. Issued 22,200 shares of common stock to each of the three organizers and collected $12 cash per share from
each of them.
b. Sold 8,500 shares of the preferred stock at $23 per share.
c. Sold 1,800 shares of the preferred stock at $23 and 3,400 shares of common stock at $13 per share.
Required:
Give the journal entries indicated for each of the above transactions. (Omit the "$" sign in your response.)

General Journal Debit Credit

a. Cash

Common stock
2

Contributed capital in excess of par, common

2

b. Cash

Preferred stock
2

Contributed capital in excess of par, preferred

2

c. Cash
 Contributed capital in excess of par, common
2

Common stock
2

Preferred stock
2

Contributed capital in excess of par, preferred

2

E11-16 Recording Treasury Stock Transactions and Analyzing Their Impact LO3, 4, 8
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During 2011 the following selected transactions affecting stockholders’ equity occurred for TARP Corporation:
a. Feb. 1 Purchased in the open market 210 shares of the company’s own common stock at $24 cash per share.
b. Jul. 15 Sold 80 of the shares purchased on February 1 for $25 cash per share.
c. Sept. 1 Sold 50 more of the shares purchased on February 1 for $23 cash per share.

Required:
1. Give the indicated journal entries for each of the transactions. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Feb. 1 Treasury stock, common

Cash

July 15 Cash

Capital in excess of par

2

Treasury stock, common

2

Sept. 1 Cash
2

Capital in excess of par

2

Treasury stock, common

P11-2 Preparing the Stockholders' Equity Section of the Balance Sheet LO3, 7
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Witt Corporation received its charter during January 2011. The charter authorized the following capital stock:
Preferred stock: 10 percent, par $12, authorized 21,400 shares
Common stock: par $10, authorized 50,800 shares.
During 2011, the following transactions occurred in the order given:
a. Issued a total of 38,100 shares of the common stock to the four organizers at $14 per share.
b. Sold 6,900 shares of the preferred stock at $18 per share.
c. Sold 3,000 shares of the common stock at $17 per share and 1,100 shares of the preferred stock at $28.
d. Net income for the year was $69,000.
Required:
Prepare the Stockholders’ Equity section of the balance sheet at December 31, 2011. (Omit the "$" sign in your
response.)
Stockholders’ Equity
Contributed capital:

Capital in excess of par, preferred $

2

Capital in excess of par, common

2

Common stock
2

Preferred stock
2

Total contributed capital

Retained earnings

Total stockholders’ equity $

E11-24 Comparing Stock Dividends and Splits LO6

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On July 1, 2011, Davidson Corporation had the following capital structure:

Common stock (par $4) $ 630,000
Capital in excess of par 1,050,000
Retained earnings 750,000
Treasury stock 0

Required:
Complete the following comparative tabulation based on two independent cases: (Round your Par per share
answers to 2 decimal places. Omit the "$" sign in your response.)
Case 1: The board of directors declared and issued a 50 percent stock dividend when the stock was selling at $6
per share.
Case 2: The board of directors voted a 6-to-5 stock split (i.e., a 20 percent increase in the number of shares). The
market price prior to the split was $6 per share.
Before Dividend After After
Items and Split Stock Dividend Stock Split
Common stock account $ $ $
Par per share $ 4 $ $
Shares outstanding
Capital in excess of par $ 1,050,000 $ $
Retained earnings $ 750,000 $ $
Total stockholders’ equity $ $ $

P13-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment
(Indirect Method) LO2, 4, 6
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XS Supply Company is developing its annual financial statements at December 31, 2011. The statements are
complete except for the statement of cash flows. The completed comparative balance sheets and income statement
are summarized:
2011 2010
Balance
sheet at
December
31
Cash $ 35,200 $ 28,800
Accounts
37,400 30,000
receivable
Merchandis
43,000 39,000
e inventory
Property
and 123,500 101,400
equipment
Less:
Accumulate
(32,100) (26,100)
d
depreciation
$ 207,000 $ 173,100

Accounts
$ 38,200 $ 29,600
payable
Wages
2,300 2,800
payable
Note
payable, 45,900 51,000
long-term
Contributed
91,400 73,800
capital
Retained
29,200 15,900
earnings
$ 207,000 $ 173,100

Income
statement
for 2011
Sales $ 129,000
Gain on sale 3,000
of
equipment
Cost of
79,000
goods sold
Other
39,700
expenses
Net income $ 13,300

Additional Data:
a. Bought equipment for cash, $34,100.
Sold equipment with original cost of $12,000, accumulated depreciation of $11,000, for $4,000 cash.
b. Paid $5,100 on the long-term note payable.
c. Issued new shares of stock for $17,600 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $17,000; wages, $14,200; taxes, $6,400; and other, $2,100.
f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts
relating to taxes or other expenses, assume that these expenses were fully paid in cash.
Required:
1. Prepare the statement of cash flows for the year ended December 31, 2011, using the indirect method.
(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)
XS SUPPLY COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities:
Net income
$
Adjustments to reconcile net income to net cash
provided by operating activities:

Increase in merchandise inventory $

2

Decrease in w ages payable

2

Increase in accounts receivable

2

Increase in accounts payable

2

Depreciation expense
2

Gain on sale of equipment

2

provided by
Net cash operating activities
Cash flows from investing activities:

Cash received from sale of equipment

2
 Cash payments to purchase equipment
2

used by
Net cash investing activities
Cash flows from financing activities:

Cash payments on long-term note

2

Cash receipts from issuing stock

2

provided by
Net cash financing activities
Net increase in cash during the year

Cash balance, January 1, 2011

Cash balance, December 31, 2011 $

E14-6 Preparing a Schedule Using Component Percentages LO3

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Lowe’s is a leading retailer in the home improvement field. Complete the component percentage analysis on the
company’s income statement that follows. (Round your answers to 2 decimal places. Omit the "%" sign in
your response.)
Consolidated Statements of Earnings
(in millions, except per share and percentage data)
Fiscal Years Ended on
January 30, February 1, February 2,
2009 % Sales 2008 % Sales 2007 % Sal
Net sales $ 48,249 100.00% $ 48,301 100.00% $ 46,937 10
Cost of sales 31,731 31,565 30,743
Gross margin 16,518 16,736 16,194
Expenses:
Selling, general, and
administrative 11,078 10,532 9,748
Store opening costs 122 145 158
Depreciation 1,547 1,375 1,170
Interest (net) 281 202 171
Total expenses 13,028 12,254 11,247
Pre-tax earnings 3,490 4,482 4,947
Income tax provision 1,313 1,707 1,907
Net earnings $ 2,177 % $ 2,775 % $ 3,040

E14-15 Computing Liquidity Ratios LO5

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Cintas designs, manufactures, and implements corporate identity uniform programs that it rents or sells to
customers throughout the United States and Canada. The company’s stock is traded on the NASDAQ and has
provided investors with significant returns over the past few years. Selected information from the company’s
balance sheet follows. For 2007, the company reported sales revenue of $3,707,300 and cost of goods sold of
$1,516,015. All amounts in thousands of dollars.
CINTAS
Balance Sheet
(amounts in thousands)
2007 2006
Cash $ 35,377 $ 38,918
Marketable securities 120,059 202,551
Accounts receivable, net 408,884 389,917
Inventories 231,755 198,006
Prepaid expense 15,800 11,180
Accounts payable 64,635 71,635
Accrued taxes 70,777 95,367
Accrued liabilities 263,514 239,072
Long-term debt due within one year 4,141 26,671

Required:
Compute the current ratio, inventory turnover ratio, and accounts receivable turnover ratio (assuming that 60
percent of sales were on credit). (Do not round intermediate calculations and round your final answers to 2
decimal places.)
Current ratio
Inventory turnover ratio
Accounts receivable turnover ratio

P14-6 Analyzing Comparative Financial Statement Using Percentages LO3

[The following information applies to the questions displayed below.]

The comparative financial statements prepared at December 31, 2012, for Prince Company showed the following
summarized data:
2012 2011
Income
Statement
Sales
$ 191,600* $ 167,600
revenue
Cost of
112,900 100,900
goods sold
Gross
78,700 66,700
profit
Operating
expenses
56,500 53,500
and interest
expense
Pretax
22,200 13,200
income
Income tax 6,660 3,960
Net income $ 15,540 $ 9,240
Balance
Sheet
Cash $ 5,800 $ 5,100
Accounts
receivable 15,800 17,800
(net)
Inventory 40,300 32,000
Operational
46,100 37,200
assets (net)
$ 108,000 $ 92,100

Current
liabilities
$ 15,000 $ 16,000
(no
interest)
Long-term
liabilities
43,500 43,500
(9%
interest)
Common
stock (par 28,400 28,400
$5)
Retained
21,100 4,200
earnings
$ 108,000 $ 92,100

*One-third was credit sales.

P14-6 Part 1
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Required:
1. Complete the following columns for each item in the preceding comparative financial statements: (Round your
percentage answers to 2 decimal places. Negative value should be indicated with a minus sign. Leave no
cells blank - be certain to enter "0" wherever required. Omit the "$" and "%" sign in your response.)
Increase (Decrease)
2012 over 2011
Amount Percent
Income Statement
Sales revenue $ %
Cost of goods sold

Gross profit
Operating expenses and interest expense

Pretax income
 Income tax

Net income $ %

Balance Sheet
Cash $ %
Accounts receivable (net)
Inventory
Operational assets (net)

Total Assets $ %

Current liabilities (no interest) $ %

Long-term liabilities (9% interest)
Common stock ($5 par)
Retained earnings

Total Liabilities and Stockholders' Equity $ %

P14-6 Part 2
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2. By what amount did working capital change? (Leave no cells blank - be certain to enter "0" wherever
required. Omit the "$" sign in your response.)
Working capital change $