Accounting final (Graded A+) - use as a guide only - 26136

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arsalanahmed

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 1.      Who is qualified to express an independent opinion about an entity’s financial statements? Exactly, what does it mean to receive an unqualified audit opinion?

2.   How do you determine the number of shares of stock that are outstanding?

3.   What are the similarities and differences between a stock dividend and a cash dividend?

 

4.   What is the effect on total equity when a stock dividend is declared and issued?

5.   What is the principal reason for a company to have a common stock split?

6.   What is a leveraged buyout and what are the risks/rewards associated with it?

PROBLEMS

 

1.   Listed below are the assets of Coca Cola Co. and Park Place Corporation, the owner of several casino resorts. (12 pts)

 

Coca Cola

%

Park Place

%

Cash and Cash Equivalents

$ 1,807

 

$   382

 

Accounts Receivable

$ 1,666

 

$   119

 

(Inventory

$    890

 

$       0

 

Prepaid Expenses

$ 2,017

 

$   133

 

Total Current Assets

$ 6,380

 

$   634

 

Long-term Investments

$ 8,549

 

$   253

 

Plant, Property, and Equipment, net

$ 3,669

 

$4,991

 

Goodwill

$    547

 

$ 1,296

 

Total Noncurrent Assets

$12,765

 

$ 6,540

 

Total Assets

$19,145

    100%

$ 7,174

    100%

 

a.   Prepare a vertical analysis (i.e., restate to percentages using total assets as the denominator) of the two companies' assets.

b.   Discuss the differences and similarities you identify.


2.   Braco has 40,000 shares of $100 par value common stock outstanding, and 10,000 shares in the treasury.  What number of additional shares would be issued in a 5% stock dividend? (8 pts)             

3.   Using the following information: (12 pts)

 

Selling price per unit

$ 100

Variable expenses per unit

$ 40

Fixed expenses per month

$60,000

 

      What is operating income at a volume of 4,000 units per month?

      What is the break-even point in units?

      What is the break-even point in terms of total revenues per month?

If sales volume were to decrease 10%, from 4,000 units per month to 3,600 units per month, how would operating income change? 

4.   Using the column headings provided below, show the effect, if any, of the transaction on each financial statement category by indicating whether it is an addition (+) or subtraction (-) and showing the amount in the appropriate column. Do not show items that affect net income in the retained earnings column. You should assume that the transactions occurred in the chronological sequence as indicated. (12 pts)

           

    (1.)   Issued 1,200 shares of $60 par value preferred stock in exchange for land and an existing building that had appraised values of $35,000 and $50,000, respectively.

    (2.)   Issued 30,000 shares of $10 par value common stock for $24 per share.

    (3.)   Purchased 1,000 shares of common stock for the treasury at $25 per share.

    (4.)   Sold 600 shares of the treasury stock purchased in transaction #3 for $30 per share.

    (5.)   Declared a cash dividend of $1.50 per share on the common stock outstanding, to be paid early next year.

    (6.)   Split the common stock 2 for 1.

           

 

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