Bundle: Accounting, Loose-leaf Version, 27th + CengageNOWv2, 2 terms Printed Access Card
27th Edition
ISBN: 9781337587426
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 15, Problem 15.4APR
Investment reporting
O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters.
| ÓBrien Industries Inc. December 31, Year 2 and Year 1 |
||
| Dec. 31, Year 2 | Dec 31, Year 1 | |
| cash | $233,000 | $220,000 |
| 136,530 | 138,000 | |
| Available for sale investments (at cost)—Note 1 | $ a | $103,770 |
| Less valuation allowance for available-for-sale investments | b. | 2,500 |
| Available for-sale investments (fair value) | $ c | $101,270 |
| Interest receivable | $ d | — |
| Investment in Jolly Roger Co. stock—Note 2 | e. | $ 77,000 |
| Office equipment (net) | 115,000 | 130,000 |
| Total assets | $ f. | $666,270 |
| Accounts payable | $ 69.400 | $ 65,000 |
| Common stock | 70.000 | 70,000 |
| Excess of issue price over par | 225,000 | 225,000 |
| g | 308,770 | |
| Unrealized gain (loss) on available for-sale investments | h. | (2,500) |
| Total liabilities and Stockholders’ equity | $ i. | $666,270 |
Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows:
| No. of Shares | Cost per Share | Total Cost | Total Fair Value | |
| Bernard Co. stock | 2,250 | $17 | $ 38,250 | $ 37,500 |
| Chadwick Co. stock | 1,260 | 52 | 65,520 | 63,770 |
| $103,770 | $101,270 |
Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding .shares of Jolly Roger Co.
The following selected investment transactions occurred during Year 2:
| May 5. | Purchased 3,080 shares of Gozar Inc. at $30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. |
| Oct. 1. | Purchased $40,000 of Nightline co. 6%, 10-Year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. |
| 9. | Dividends of $12,500 are received on the Jolly Roger co. investment. |
| Dec. 31 | Jolly Roger co. reported a total net income of $112,000 for year 2. O'Brien industries Inc. recorded equity earnings for its share of Jolly Roger co. net income. |
| 31. | Accrued three months of interest on the Nightline bonds. |
| 31. | Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: |
| Available-for-Sale Investments |
Fair Value |
| Bernard Co. stock | $15,40 per share |
| Chadwick Co. stock | $46,00 per share |
| Gozar Inc. stock | $32,00 per share |
| Nightline Co. bonds | $98 per $ 100 of face amount |
Dec. 31. Closed the O’Brien Industries Inc. net income of $146,230. O'Brien Industries Inc. paid no dividends during the year.
Instructions
Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Investment Reporting
O'Brien Industries Inc. is a book publisher.
Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows:
Cost per Share
Bernard Co. stock
Chadwick Co. stock
Year 2
May 5.
Oct. 1.
Oct. 9.
Dec. 31.
Dec. 31.
Dec. 31.
Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding shares of Jolly Roger Co.
The following selected investment transactions occurred during Year 2:
Available-for-Sale Investments
Bernard Co. stock
No. of Shares
Chadwick Co. stock
Dec.
31.
Gozar Inc. stock
1,600
Nightline Co. bonds
Required:
900
Purchased 1,900 shares of Gozar Inc. at $26 per share including brokerage commission. Gozar Inc. is classified as an available-for-
sale security.
Purchased $33,000 of Nightline Co. 5%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest
on October 1 and April 1.
Dividends of $9,000 are…
Compute acid test ratio.
Compute current ratio
Chapter 15 Solutions
Bundle: Accounting, Loose-leaf Version, 27th + CengageNOWv2, 2 terms Printed Access Card
Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - How does the accounting for a dividend received...Ch. 15 - Prob. 5DQCh. 15 - What is the major difference in the accounting for...Ch. 15 - Prob. 7DQCh. 15 - How would a debit balance in Unrealized Gain...Ch. 15 - What are the factors contributing to the trend...Ch. 15 - Prob. 10DQ
Ch. 15 - Prob. 15.1APECh. 15 - Bond investment transactions Journalize the...Ch. 15 - Prob. 15.2APECh. 15 - Stock investment transactions On September 12,...Ch. 15 - Equity method On January 2, Cohan Company acquired...Ch. 15 - Prob. 15.3BPECh. 15 - Valuing trading securities at fair value On...Ch. 15 - Valuing trading securities at fair value On...Ch. 15 - valuing available-for-sale securities at fair...Ch. 15 - Valuing available-for-sale securities at fair...Ch. 15 - Prob. 15.6APECh. 15 - Prob. 15.6BPECh. 15 - Prob. 15.1EXCh. 15 - Prob. 15.2EXCh. 15 - Prob. 15.3EXCh. 15 - Entries for investment in bonds, interest and sale...Ch. 15 - Prob. 15.5EXCh. 15 - Prob. 15.6EXCh. 15 - Prob. 15.7EXCh. 15 - Entries for stock investments, dividends, and sale...Ch. 15 - Entries for stock investments, dividends, and sale...Ch. 15 - Equity method for stock investment At a total cost...Ch. 15 - Prob. 15.11EXCh. 15 - Equity method for stock investment with loss On...Ch. 15 - Equity method for stock investment Hawkeye...Ch. 15 - Missing statement items, trading investments JED...Ch. 15 - Fair value journal entries, trading investments...Ch. 15 - Fair value journal entries, trading investments...Ch. 15 - Fair value journal entries, trading investments...Ch. 15 - Balance sheet presentation, trading investments...Ch. 15 - Missing statement items, available-for-sale...Ch. 15 - Fair value journal entries, availableforsale...Ch. 15 - Fair value journal entries, available for sale...Ch. 15 - Fair value journal entries, availableforsale...Ch. 15 - Balance sheet presentation of available-for-sale...Ch. 15 - Balance sheet presentation of available-for-ale...Ch. 15 - Dividend yield At the market close on May 12 of a...Ch. 15 - Dividend yield The market price for Microsoft...Ch. 15 - Prob. 15.27EXCh. 15 - Prob. 15.28EXCh. 15 - Prob. 15.29EXCh. 15 - Prob. 15.1APRCh. 15 - Stock investment transactions, trading securities...Ch. 15 - Stock investment transactions, equity method and...Ch. 15 - Investment reporting O'Brien Industries Inc. is a...Ch. 15 - Prob. 15.1BPRCh. 15 - Prob. 15.2BPRCh. 15 - Stock investment transactions, equity method and...Ch. 15 - Investment reporting Teasdale Inc. manufactures...Ch. 15 - Selected transactions completed by Equinox...Ch. 15 - Prob. 15.1CPCh. 15 - Prob. 15.2CPCh. 15 - Warren Buffett and "look-through" earnings...Ch. 15 - Benefits of fair value On July 16, 20Y1, Wyatt...Ch. 15 - International fair value accounting International...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Ratios Analyses: McCormick Refer to the information for McCormick above. Additional information for 20X3 it as follows (amounts in millions): Required: Next Level Compute the following for 20X3. Provide a brief description of what each ratio reveals about McCormick 1. return on common equity 2. debt-to-assets 3. debt-toequity 4. current 5. quick (McCormick uses cash and equivalents, short-term securities and receivables in their quick ratio calculation.) 6. inventory turnover days 7. accounts receivable turnover days 8. accounts payable turnover days 9. operating cycle (in days) 10. total asset turnover Use the following information for 14-17 and 14-18: The Hershey Company is one of the worlds leading producers of chocolates, candies, and confections. It sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hersheys consolidated balance sheets for 20X2 and 20X3 follow.arrow_forwardPlease do not give solution in image format thankuarrow_forwardPrepare a blance sheetarrow_forward
- Analysis Analysis Bal Sheet Inc Stmt Prepare a vertical analysis of the balance sheets for Year 4 and Year 3. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments FANNING COMPANY Vertical Analysis of Balance Sheets Year 4 Plant (net) Land Total long-term assets Total assets Liabilities and stockholders' equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other Total noncurrent liabilities Total liabilities Stockholders' equity Preferred stock (par value $10, 4% cumulative, nonparticipating; 6,700 shares authorized and issued) Common stock (no par; 50,000 shares authorized; 10,000 shares issued) Retained earnings Total stockholders' equity Total liabilities & stockholders' equity…arrow_forwardPlease do not give image formatarrow_forwardCurrent Position Analysis The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8: Dec. 31, 20Y9 Dec. 31, 20Y8 Cash $361,500 $268,700 Temporary investments 385,700 294,400 Accounts and notes receivable (net) 354,800 320,900 Inventories 495,900 397,800 Prepaid expenses 374,100 122,200 Total current assets $1,972,000 $1,404,000 Accounts payable $336,400 $364,000 Accrued liabilities 243,600 156,000 Total current liabilities $580,000 $520,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. 20Y9 20Υ8 Working capital $ 2$ Current ratio Quick ratioarrow_forward
- Solve all questionsarrow_forwardwo years. EXERCISE 15-2 Financial Ratios for Assessing Liquidity LO15-2 ending December 31 appear below. The company did not issue any new common stock during the payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was this year was $18. All of the company’s sales are on account. year Deceof 800,000 shares of common stock were outstanding, The interest rate on the bond year. $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash .... $ 1,280 $ 1,560 Accounts receivable, net 12,300 9,100 Inventory .... 9,700 8,200 Prepaid expenses 1,800 2,100 Total current assets 25,080 20,960 Property and equipment: Land ..... 6,000 6,000 Buildings and equipment, net .. 19,200 19,000 epeA Total property and equipment ... 25,200 25,000 Total assets $50,280 $45,960 Liabilities and Stockholders' Equity Current…arrow_forwardAll info for this question is includedarrow_forward
- Ledger Properties of XYZ Itd has the following financlal information: Current Prior Year Year Revenues $18,915 $13,610 Administrative 2,106 1,602 expenses Interest expense 816 468 Cost of goods 9,715 6,309 sold Depreciation 408 387 Net fixed assets 12,711 11,984 Current liabilities 4,652 4,625 Common stock 5,000 4,000 Current assets 6,506 4,687 Long-term debt 2,200 ? Retained earnings 1365 246 Dividends paid 290 275 What is the cash flow of the firm for the current year if the tax rate is 12 percent? Select one:a. 1500 b. 2096 c. 25000arrow_forwardThe following summary financial statement information is provided for Denbury Industries: Cash and cash equivalents Short-term investments Accounts receivable Inventory Property, plant, and equipment Long-term investments Total assets Net income Interest expense Investment income Multiple Choice O 2024 2023 $ 239,850 $ 368,740 Calculate the return on investments ratio for 2024. 2.5% 25,640 18,740 658,930 690,760 345,920 415,380 859,710 735,480 83,670 65,300 2,213,720 2,294,400 $ 279,630 $ 199,850 39,540 25,670 5,750 3,170arrow_forwardData extracts from Gamma's accounts are shown below Turnover Gross Profit Expenses Operating Profit Interest and Tax Profit for Year Non-current assets Inventory Receivables Cash at Bank Payables Other Current Liabilities Net current assets Shareholder funds 10% Debenture (2030) Required: Ye-Dec-20 Ye-Dec-19 18,500 16,000 4,500 4,000 1,500 2,400 3,000 1,600 1,100 700 1,900 900 19,600 16,400 840 640 2,790 1,890 450 350 830 570 340 460 2,910 1,850 15,510 13,250 7,000 5,000 22,510 18,250 A) Calculate the following accounting ratios for each year-end 1) Return on Capital Employed 2) Profit Margin on Sales 3) Gearing Ratio 4) Interest Cover Ratio 5) Return to Shareholders 6) Quick Asset or Acid test Ratio 7) Cash Conversion Period (Operating Cash Cycle) B) Outline the limitations of accounting ratiosarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
The ACCOUNTING EQUATION For BEGINNERS; Author: Accounting Stuff;https://www.youtube.com/watch?v=56xscQ4viWE;License: Standard Youtube License