Debits Increase Assets Expenses Dividends Credit Decrease Assets Expenses Dividends Contingent Liabilities potential liability that depends on future outcome of past events Accrue loss probable amount estimable Disclose no journal entry loss reasonable possible Credits Increase Liabilities Common Stock Retained Earnings Revenues Debits Decrease Liabilities Common Stock Retained Earnings Revenues Earnings per Share net income preferred dividends common share outstanding Earnings per Share of c stock 10 000 shares of c stock outstanding income from outstanding operations loss on disc operat net of taxes income before extraordinary item extra gain net of taxes net income element of income pref divid c shares outstanding 17 000 B F Inc is authorized to issue 110 000 shares of c stock and 8 000 shares of p stock a Feb 19 issued 17 000 shares of 2 par c stock for cash of 8 per share cash 136 000 c stock 34 000 paid in cap com 102 000 17 000 X 8 136 000 X 2 34 000 b issued 300 shares of 1 no par p stock for 52 000 cash cash 52 000 p stock 52 000 c received inv valued at 8 500 equip w value of 9 000 for 3 100 shares of the 2 par c stock inv 8 500 equip 9 000 c stock 6 200 paid in cap com 11 300 3 100 X 2 6 200 8 500 9 000 6 200 11 300 current ratio current assets current liabilities quick acid test ratio cash ST investment net receivables current liabilities inventory turnover COGS Avg Inv DIO 365 inventory turnover A R turnover net sales avg net receivables DSO avg net receivables one days sales avg net receivables 365 A P turnover COGS avg turnover DPO 365 A P turnover cash conversion cycle DIO DSO DPO focus on collections and selling inventory faster debt ratio total liabilities total assets times interest earned ratio income from operations interest expense rate of return on sales net income net sales asset turnover net sales average total assets rate of return on total assets rate of return on sales X asset turnover leverage ratio avg total assets rate of return common SE net income preferred dividends avg common SE P E market price per share earnings per share x 100 Horizontal trend Vertical common size any yr base yr eachincomest item Case A issue stock buy assets in sep trans net sales revenue Ashley Inc issued 11 000 shares of 35 par common stock for cash 950 000 In sep transaction Ashley used the cash to purch a building for 510 000 equip for 440 000 cash 950 000 c stock 385 000 paid in cap com 565 000 11 000 X 35 385 000 building 510 000 equip 440 000 cash 950 000 Case B issue stock to acquire the assets in single trans Ashley Inc issued 11 000 shares of 35 par common stock to acquire a building valued at 510 000 equip worth 440 000 building 510 000 equip 440 000 c stock 385 000 paid in cap com 565 000 Net Income sales rev COGS operating exp depr exp Statement of Cash Flows operating activities Indirect Method net income cr depr dr loss gain on sale of land dr in A R inv prepaid exp in current liabilities in current assets other than cash dr in current liabilities dr total cr net cash provided net income increase decrease collections sales increase in A R 1 Purchased 600 shares of Tech stock paying 17 share Mail 4 you intends to hold the invest for the indef future 2 Received cash divid of 1 29 per share on the Tech stock 3 Adjusted the Tech invest to c stock value of 5 300 1 L term invest 10 200 cash 10 200 2 cash 774 dividend rev 774 3 unreal loss on invest 4 900 allow to adjust invest to M 4 900 income st divid rev of 774 st of other comp income unreal loss avail for sale invest of 4 900 Assets total current assets L term invest market val Stockholders Equity common stock retained earnings accum other comp income unreal loss on invest XXX XXX 4 900 XXX 5 300 ending tax pay beg tax pay income tax exp tax pay On Jan 31 D L Inc issued a 10 yr 8 B P with a face val of 7 000 000 The bonds were issued at 97 pay int on Jan Jul 31 D L Inc amortizes bonds by straight line method a Record issuance of bond pay Jan 31 cash 6 790 000 disc on B P 210 000 B P 7 000 000 7 000 000 x 97 6 790 000 b record pay of semi a int amortize bond disc Jul 31 int exp 295 000 disc on B P 10 500 cash 280 000 7 000 000 X 8 X 6 12 280 000 210 000 10 2 10 500 c record int accrual Dec 31 int exp 242 083 disc on B P 8 750 int pay 233 333 10 500 X 5 6 8 750 7 000 000 X 8 X 5 12 233 333 Operating net income depr depletion amor exp loss on sale long term assets decrease in current assets other than cash increase in current liabilities decrease in current liabilities gain on sale of L term assets increase in current assets other than cash Investing sales of long term assets collection of notes receivables purchases of long term assets loans to others Financing issuance of stock sale of t stock borrowing purchase of treasury stock payment of notes B P payments of dividends L term liabil Non Cash Investing Financing acquisition of equip by issuance of note payable purch of land by c stock K Sports Authority purch inventory costing 8 000 by signing a 11 S term note pay The purch occurred on Jul 31 2012 K pays annual interest each yr on Jul 31 Journalize the comp s a purch of inventory b accrual of interest exp on Apr 30 2013 the yr end c payment of note plus interest on Jul 31 2013 round to whole d show what the comp would report on balance sheet income st at year end date a inventory 8 000 note pay S term 8 000 b int exp 660 int pay 660 note pay X int rate X 9 12 c note pay S term 8 000 int pay 660 int exp 220 cash 8 880 8 000 X 11 880 X 3 12 220 d balance sheet note pay S term 8 000 int pay 660 income st int exp 660 1 issued 2 100 shares of 1 par c stock 14 2 purch 400 shares of t stock 15 3 sold 200 shares of t stock at 16 1 cash 29 400 c stock 2 100 paid in cap com 27 300 2 t stock com 6 000 cash 6 000 3 cash 3 200 t stock com 3 000 paid in cap t 200 200 X 16 3 200 200 X 15 3 000 D Corp issued 5 yr B …