Bravo Co. Balance Business, Accounting Homework Help
Question 1
The differences in Bravo Inc.’s balance sheet accounts at December 31, year 2 and year 1, are presented below.
|
Assets |
Increase (Decrease) |
|
Cash and cash equivalents |
$120,000 |
|
Available-for-sale securities |
300,000 |
|
Accounts receivable, net |
0 |
|
Inventory |
80,000 |
|
Long-term investments |
(100,000) |
|
Plant assets |
700,000 |
|
Accumulated depreciation |
0 |
|
Total |
$1,100,000 |
|
Liabilities and Stockholders’ Equity |
Increase (Decrease) |
|
Accounts payable and accrued liabilities |
$(5,000) |
|
Dividends payable |
160,000 |
|
Short-term bank debt |
325,000 |
|
Long-term debt |
110,000 |
|
Common stock, $10 par |
100,000 |
|
Additional paid-in capital |
120,000 |
|
Retained earnings |
290,000 |
|
Total |
$1,100,000 |
The following additional information relates to year 2:
> Net income was $790,000.
> Cash dividends of $500,000 were declared.
> Building costing $600,000 and having a carrying amount of $350,000 was sold for $350,000.
> Equipment costing $110,000 was acquired through issuance of long-term debt.
> A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments.
> 10,000 shares of common stock were issued for $22 a share.
Prepare Bravo’s year 2 Cash Flows from Operating Activities (section), using the indirect method:
Question 2
Bravo Co. reported bonds payable of $47,000 at December 31, year 1, and $60,000 at December 31, year 2. During year 2, Bravo issued $20,000 of bonds payable in exchange for equipment. There was no amortization of bond premium or discount during the year. What amount should Bravo report in its year 2 statement of cash flows for redemption of bonds payable?
Question 3
In preparing its cash flow statement for the year ended December 31, year 1, Bravo Co. collected the following data:
|
Gain on sale of equipment |
$(6,000) |
|
Proceeds from sale of equipment |
10,000 |
|
Proceeds of Charlie Co bonds at maturity at par |
200,000 |
|
Amortization of bond discount |
2,000 |
|
Dividends declared |
(45,000) |
|
Dividends paid |
(38,000) |
|
Proceeds from sale of treasury stock (carrying amount $65,000) |
75,000 |
In its December 31, year 1 statement of cash flows, what amount should Bravo report as net cash for investing activities?
Question 4
In preparing its cash flow statement for the year ended December 31, year 1, Bravo Co. collected the following data:
|
Gain on sale of equipment |
$(6,000) |
|
Proceeds from sale of equipment |
10,000 |
|
Purchase of A.S., Inc. bonds (par value $200,000) |
(180,000) |
|
Amortization of bond discount |
2,000 |
|
Dividends declared |
(45,000) |
|
Dividends paid |
(38,000) |
|
Purchase of treasury stock |
(75,000) |
In its December 31, year 1 statement of cash flows, what amount should Bravo report as net cash used in financing activities?
Question 5
The differences in Bravo Inc.’s balance sheet accounts at December 31, year 2 and year 1, are presented below.
|
Assets |
Increase (Decrease) |
|
Cash and cash equivalents |
$120,000 |
|
Available-for-sale securities |
300,000 |
|
Accounts receivable, net |
0 |
|
Inventory |
80,000 |
|
Long-term investments |
(100,000) |
|
Plant assets |
700,000 |
|
Accumulated depreciation |
0 |
|
Total |
$1,100,000 |
|
Liabilities and Stockholders’ Equity |
Increase (Decrease) |
|
Accounts payable and accrued liabilities |
$(5,000) |
|
Dividends payable |
160,000 |
|
Short-term bank debt |
325,000 |
|
Long-term debt |
110,000 |
|
Common stock, $10 par |
100,000 |
|
Additional paid-in capital |
120,000 |
|
Retained earnings |
290,000 |
|
Total |
$1,100,000 |
The following additional information relates to year 2:
> Net income was $790,000.
> Cash dividends of $500,000 were declared.
> Building costing $600,000 and having a carrying amount of $350,000 was sold for $350,000.
> Equipment costing $110,000 was acquired through issuance of long-term debt.
> A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments.
> 10,000 shares of common stock were issued for $22 a share.
In Bravo’s year 2 statement of cash flows, Net cash used in investing activities was
Question 6
The differences in Bravo Inc.’s balance sheet accounts at December 31, year 2 and year 1, are presented below.
|
Assets |
Increase (Decrease) |
|
Cash and cash equivalents |
$120,000 |
|
Available-for-sale securities |
300,000 |
|
Accounts receivable, net |
0 |
|
Inventory |
80,000 |
|
Long-term investments |
(100,000) |
|
Plant assets |
700,000 |
|
Accumulated depreciation |
0 |
|
Total |
$1,100,000 |
|
Liabilities and Stockholders’ Equity |
Increase (Decrease) |
|
Accounts payable and accrued liabilities |
$(5,000) |
|
Dividends payable |
160,000 |
|
Short-term bank debt |
325,000 |
|
Long-term debt |
110,000 |
|
Common stock, $10 par |
100,000 |
|
Additional paid-in capital |
120,000 |
|
Retained earnings |
290,000 |
|
Total |
$1,100,000 |
The following additional information relates to year 2:
> Net income was $790,000.
> Cash dividends of $500,000 were declared.
> Building costing $600,000 and having a carrying amount of $350,000 was sold for $350,000.
> Equipment costing $110,000 was acquired through issuance of long-term debt.
> A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments.
> 10,000 shares of common stock were issued for $22 a share.
In Bravo’s year 2 statement of cash flows, Net cash provided by financing activities was
Question 7
Information related to data to be reported in the statement of cash flows of Bravo Dress
Shops, Inc. based on the following information:
Comparative Balance Sheet:
|
Bravo Dress Shops, Inc. |
||
|
BALANCE SHEETS |
||
|
December 31 |
||
|
Assets |
Year 2 |
Year 1 |
|
Cash |
$300,000 |
$200,000 |
|
Accounts receivable, net |
840,000 |
580,000 |
|
Merchandise inventory |
660,000 |
420,000 |
|
Prepaid expenses |
100,000 |
50,000 |
|
Total current assets |
$1,900,000 |
$1,250,000 |
|
Long-term investments |
$80,000 |
$0 |
|
Land, buildings, and fixtures |
1,130,000 |
600,000 |
|
Less accumulated depreciation |
110,000 |
50,000 |
|
Property, Plant & Equipment (net) |
$1,020,000 |
$550,000 |
|
Total assets |
$3,000,000 |
$1,800,000 |
|
Liabilities & Equities |
||
|
Current liabilities: |
||
|
Accounts payable |
$530,000 |
$440,000 |
|
Accrued expenses |
140,000 |
130,000 |
|
Dividends payable |
70,000 |
0 |
|
Total current liabilities |
$740,000 |
$570,000 |
|
Note payable—due year 4 |
$500,000 |
$0 |
|
Stockholders’ equity: |
||
|
Common stock |
$1,200,000 |
$900,000 |
|
Retained earnings |
560,000 |
330,000 |
|
Total stockholders’ equity |
1,760,000 |
1,230,000 |
|
Total liabilities and stockholders’ equity |
$3,000,000 |
$1,800,000 |
Comparative Income Statement:
|
Bravo Dress Shops, Inc. |
||
|
INCOME STATEMENTS |
||
|
Year ended December 31 |
||
|
Net credit sales |
$6,400,000 |
$4,000,000 |
|
Cost of goods sold |
5,000,000 |
3,200,000 |
|
Gross profit |
1,400,000 |
800,000 |
|
Expenses (including income taxes) |
1,000,000 |
520,000 |
|
Net income |
$400,000 |
$280,000 |
Additional information available included the following:
> All accounts receivable and accounts payable are related to trade merchandise. Accounts payable are recorded net and always are paid to take all of the discount allowed. The allowance for doubtful accounts at the end of year 2 was the same as at the end of year 1; no receivables were charged against the allowance during year 2.
> The proceeds from the note payable were used to finance a new store building. Capital stock was sold to provide additional working capital.
Cash collected during year 2 from accounts receivable amounted to
Question 8
Information related to data to be reported in the statement of cash flows of Bravo Dress Shops, Inc. based on the following information:
Comparative Balance Sheet:
|
Bravo Dress Shops, Inc. |
||
|
BALANCE SHEETS |
||
|
December 31 |
||
|
Assets |
Year 2 |
Year 1 |
|
Cash |
$300,000 |
$200,000 |
|
Accounts receivable, net |
840,000 |
580,000 |
|
Merchandise inventory |
660,000 |
420,000 |
|
Prepaid expenses |
100,000 |
50,000 |
|
Total current assets |
$1,900,000 |
$1,250,000 |
|
Long-term investments |
$80,000 |
$0 |
|
Land, buildings, and fixtures |
1,130,000 |
600,000 |
|
Less accumulated depreciation |
110,000 |
50,000 |
|
Property, Plant & Equipment (net) |
$1,020,000 |
$550,000 |
|
Total assets |
$3,000,000 |
$1,800,000 |
|
Liabilities & Equities |
||
|
Current liabilities: |
||
|
Accounts payable |
$530,000 |
$440,000 |
|
Accrued expenses |
140,000 |
130,000 |
|
Dividends payable |
70,000 |
0 |
|
Total current liabilities |
$740,000 |
$570,000 |
|
Note payable—due year 4 |
$500,000 |
$0 |
|
Stockholders’ equity: |
||
|
Common stock |
$1,200,000 |
$900,000 |
|
Retained earnings |
560,000 |
330,000 |
|
Total stockholders’ equity |
1,760,000 |
1,230,000 |
|
Total liabilities and stockholders’ equity |
$3,000,000 |
$1,800,000 |
Comparative Income Statement:
|
Bravo Dress Shops, Inc. |
||
|
INCOME STATEMENTS |
||
|
Year ended December 31 |
||
|
Net credit sales |
$6,400,000 |
$4,000,000 |
|
Cost of goods sold |
5,000,000 |
3,200,000 |
|
Gross profit |
1,400,000 |
800,000 |
|
Expenses (including income taxes) |
1,000,000 |
520,000 |
|
Net income |
$400,000 |
$280,000 |
Additional information available included the following:
> All accounts receivable and accounts payable are related to trade merchandise. Accounts payable are recorded net and always are paid to take all of the discount allowed. The allowance for doubtful accounts at the end of year 2 was the same as at the end of year 1; no receivables were charged against the allowance during year 2.
> The proceeds from the note payable were used to finance a new store building. Capital stock was sold to provide additional working capital.
Purchases for year 2 on accounts payable to suppliers amounted to
Question 9
The following data pertains to Bravo Co.’s investments in marketable equity securities:
|
Fair Value |
|||
|
Cost |
12/31/Y2 |
12/31/Y1 |
|
|
Trading |
$150,000 |
$155,000 |
$100,000 |
|
Available-for-sale |
155,000 |
130,000 |
120,000 |
Assume Bravo does not elect the fair value option to report investments. What amount should Bravo report as net unrealized loss on marketable equity securities at December 31, year 2, in accumulated other comprehensive income in stockholders’ equity?
Question 10
Data regarding Bravo Corp.’s available-for-sale securities follow:
|
Cost |
Fair value |
|
|
December 31, year 1 |
$150,000 |
$130,000 |
|
December 31, year 2 |
150,000 |
150,000 |
Differences between cost and fair values are considered temporary. Bravo does not elect the fair value option to account for available-for-sale securities. The effect on Bravo’s year 2 other comprehensive income would be
Question 11
Data regarding Bravo Corp.’s available-for-sale securities follow:
|
Cost |
Fair value |
|
|
December 31, year 1 |
$150,000 |
$130,000 |
|
December 31, year 2 |
150,000 |
150,000 |
Differences between cost and fair values are considered temporary. Bravo elects to use the fair value option for reporting all available-for-sale securities. The effect of accounting for available-for-sale securities on year 2 income statement would be
Question 12
Bravo Corp. reported accrued investment interest receivable of $38,000 and $46,500 at January 1 and December 31, year 1, respectively. During year 1, cash collections from the investments included the following:
|
Capital gains distributions |
$145,000 |
|
Interest |
125,000 |
What amount should Bravo report as interest revenue from investments for year 1?
Question 13
Echo Corp. had investments in marketable debt securities costing $650,000 that were classified as available-for-sale. On June 30, year 2, Echo decided to hold the investments to maturity and accordingly reclassified them to the held-to-maturity category on that date. The investments’ fair value was $575,000 at December 31, year 1, $520,000 at June 30, year 2, and $490,000 at December 31, year 2. Echo does not elect the fair value option to account for these investments. What amount should Echo report as net unrealized loss on marketable debt securities in its year 2 statement of stockholders’ equity?
Question 14
Gulf Corp. owns 20% of Hotelie Corp.’s preferred stock and 80% of its common stock. Hotelie’s stock outstanding at December 31, year 1, is as follows:
|
15% cumulative preferred stock |
$100,000 |
|
Common stock |
700,000 |
Hotelie reported net income of $60,000 for the year ended December 31, year 1. Assume that Gulf does not elect the fair value option to report the investment in Hotelie. What amount should Gulf record as equity in earnings of Hotelie for the year ended December 31, year 1?
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