Accounting
27th Edition
ISBN: 9781285149165
Author: WARREN
Publisher: CENGAGE C
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Textbook Question
Chapter 15, Problem 15.4BPR
Investment reporting
Teasdale Inc. manufactures and sells commercial and residential security equipment. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 are provided below. Selected missing balances are shown by letters.
| Teasdale Inc. December 31, Year 2 and Year 1 |
||
| Dec. 31, Year 2 | Dec. 31, Year 1 | |
| Cash | $160,000 | $ 156,000 |
| 11S.OOO | 108,000 | |
| Available for-sale investments (at cost)—Note 1 | $ a. | $ 91,200 |
| Plus valuation allowance for available-for-sale investments | b. | 8,776 |
| Available for-sale investments (fair value) | $ c | $ 99,976 |
| Interest receivable | $ d. | — |
| Investment in Wright Co. stock—Note 2 | e. | $ 69,200 |
| Office equipment (net) | 96,000 | 105,000 |
| Total assets | $ f. | 5538,176 |
| Accounts payable | $ 91,000 | $ 72,000 |
| Common stock | 80,000 | 80,000 |
| Excess of issue price over par | 250,000 | 250,000 |
| g | 127,400 | |
| Unrealized gain (loss) on available for-sale investments | h. | 8,776 |
| Total liabilities and |
S i. | 5538,176 |
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 | |
| Alvarez Inc stock | 960 | $38,00 | $36,480 | $39,936 |
| Hirsch Inc. stock | 1,900 | 28,80 | $4,720 | 60,040 |
| $91,200 | $99,976 |
Note 2. The Investment in Wright Co. stack is an equity method investment representing 30% of the outstanding shares of Wright Co.
The following selected investment transactions occurred during Year 2:
| Mar. 18. | Purchased 800 shares of Richter Inc. at $40, including brokerage commission. Richter is classified as an available-for-sale security. |
| July 12. | Dividends of $12,000 art: received on the Wright Co. investment. |
| Oct 1. | Purchased $24,000 of Toon Co. 4%, 10-year bonds at 100. the bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. |
| December 31. | Wright Co. reported a total net income of $80,000 for Year 2. Teasdale recorder equity earnings for its share of Wright Co. net income. |
| 31. | Accrued interest for three months on the Toon Co. bonds purchased on October 1. |
| 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 |
| Alvarez Inc. stock | $41,50 per share |
| Hirsch Inc stock | $26,00 per share |
| Richter Inc. stock | $48,00 per share |
| Toon Co. bonds | 101 per $ 100 of face amount |
31. Closed the Teasdale Inc. net income of $51,240. Teasdale Int. paid no dividends during the year.
Instructions
Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.
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Help | System Announcements
Balance Sheet
As of 12/31/19
Assets:
Liabilities and Equity:
Cash and marketable securities
$28,987
Accounts payable and accruals
$154,807
Accounts receivable
$142,845
Short-term notes payable
$21,639
Inventory
$212,722
Total current liabilities
$176,446
Total current assets
$384,554
Long term debt
$155,510
Net plant and equipment
$602,309
Total liabilities
$331,956
Goodwill and cther assets
$42,422
Common stock
$314,932
Retained earnings
$382,397
Total assets
$1,029,285
Total liabilities and equity
$1,029,285
In addition, it was reported that the firm had a net income of:
$158,531
and net sales of:
$4,338,283
Calculate the following ratios for this firm (Use 365 days for calculation. Round answers to 2 decimal places, e.g. 52.75.):
Current Ratio
times
Quick Ratio
times
Average Collection Period
days
Total Asset Turnever
times
Fixed Asset Turnover
times
Question
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Compute acid test ratio.
Chapter 15 Solutions
Accounting
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...
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