Your Questions About An Investor Purchased 500 Shares Of Common Stock $25 Par For $21 750

Charles asks…

Question for Accountant !?

1.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a.$12,750 gain
b.$600 gain
c.$600 loss
d.$9,250 loss

2.When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
a.prior period adjustment
b.extraordinary gain or loss
c.paid-in capital addition
d.gain or loss

3.Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
a.debit Investment in Worton Corporation; credit Cash
b.debit Cash; credit Dividend Revenue
c.debit Investment in Worton Corporation; credit Income of Worton Corporation
d.debit Cash; credit Investment in Worton Corporation

4.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a.$4,350 gain
b.$400 gain
c.$400 loss
d.$16,800 loss

5.On January 1, 2010, Blanton Company’s Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2010, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report?
a.an Unrealized Loss on Trading Investments of $4,500.
b.an Unrealized Gain on Trading Investments of $4,500.
c.an Unrealized Gain on Trading Investments of $18,000.
d.an Unrealized Loss on Trading Investments of $18,000.

6.On April 1, 2010, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010, Stanton received its first semiannual interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on April 1, 2010, will include:
a.a credit to Interest Payable for $2,000.
b.a debit to Investments – Harris Company for $52,000.
c.a credit for Cash of $50,000.
d.a debit to Investments – Harris Company for $50,000.

financi4 answers:

The answers can be found in your textbook or at a price of $225 per hour payable in US funds

Steven asks…

Accounting Question help 10 pts!!!!!!!!!!!?

1.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a.$12,750 gain
b.$600 gain
c.$600 loss
d.$9,250 loss

2.When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
a.prior period adjustment
b.extraordinary gain or loss
c.paid-in capital addition
d.gain or loss

3.Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
a.debit Investment in Worton Corporation; credit Cash
b.debit Cash; credit Dividend Revenue
c.debit Investment in Worton Corporation; credit Income of Worton Corporation
d.debit Cash; credit Investment in Worton Corporation

4.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a.$4,350 gain
b.$400 gain
c.$400 loss
d.$16,800 loss

5.On January 1, 2010, Blanton Company’s Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2010, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report?
a.an Unrealized Loss on Trading Investments of $4,500.
b.an Unrealized Gain on Trading Investments of $4,500.
c.an Unrealized Gain on Trading Investments of $18,000.
d.an Unrealized Loss on Trading Investments of $18,000.

6.On April 1, 2010, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010, Stanton received its first semiannual interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on April 1, 2010, will include:
a.a credit to Interest Payable for $2,000.
b.a debit to Investments – Harris Company for $52,000.
c.a credit for Cash of $50,000.
d.a debit to Investments – Harris Company for $50,000.

financi4 answers:

And your answer is :

Study!

George asks…

Accounting help 10 pts!!!!!?

1.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a.$12,750 gain
b.$600 gain
c.$600 loss
d.$9,250 loss

2.When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
a.prior period adjustment
b.extraordinary gain or loss
c.paid-in capital addition
d.gain or loss

3.Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
a.debit Investment in Worton Corporation; credit Cash
b.debit Cash; credit Dividend Revenue
c.debit Investment in Worton Corporation; credit Income of Worton Corporation
d.debit Cash; credit Investment in Worton Corporation

4.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a.$4,350 gain
b.$400 gain
c.$400 loss
d.$16,800 loss

5.On January 1, 2010, Blanton Company’s Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2010, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report?
a.an Unrealized Loss on Trading Investments of $4,500.
b.an Unrealized Gain on Trading Investments of $4,500.
c.an Unrealized Gain on Trading Investments of $18,000.
d.an Unrealized Loss on Trading Investments of $18,000.

6.On April 1, 2010, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010, Stanton received its first semiannual interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on April 1, 2010, will include:
a.a credit to Interest Payable for $2,000.
b.a debit to Investments – Harris Company for $52,000.
c.a credit for Cash of $50,000.
d.a debit to Investments – Harris Company for $50,000.

financi4 answers:

1.a
2.d
3.b
4.a
5.c
6.c

Thomas asks…

Accounting help 10 pts!!!!!!!!!!!!!!!!?

1.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a.$12,750 gain
b.$600 gain
c.$600 loss
d.$9,250 loss

2.When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
a.prior period adjustment
b.extraordinary gain or loss
c.paid-in capital addition
d.gain or loss

3.Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
a.debit Investment in Worton Corporation; credit Cash
b.debit Cash; credit Dividend Revenue
c.debit Investment in Worton Corporation; credit Income of Worton Corporation
d.debit Cash; credit Investment in Worton Corporation

4.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a.$4,350 gain
b.$400 gain
c.$400 loss
d.$16,800 loss

5.On January 1, 2010, Blanton Company’s Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2010, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report?
a.an Unrealized Loss on Trading Investments of $4,500.
b.an Unrealized Gain on Trading Investments of $4,500.
c.an Unrealized Gain on Trading Investments of $18,000.
d.an Unrealized Loss on Trading Investments of $18,000.

6.On April 1, 2010, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010, Stanton received its first semiannual interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on April 1, 2010, will include:
a.a credit to Interest Payable for $2,000.
b.a debit to Investments – Harris Company for $52,000.
c.a credit for Cash of $50,000.
d.a debit to Investments – Harris Company for $50,000.

financi4 answers:

Wow who would read all this

Joseph asks…

Accounting Help 10 pts!?

1.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a.$12,750 gain
b.$600 gain
c.$600 loss
d.$9,250 loss

2.When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)
a.prior period adjustment
b.extraordinary gain or loss
c.paid-in capital addition
d.gain or loss

3.Blanton Corporation purchased 17% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record dividends from Worton Corporation?
a.debit Investment in Worton Corporation; credit Cash
b.debit Cash; credit Dividend Revenue
c.debit Investment in Worton Corporation; credit Income of Worton Corporation
d.debit Cash; credit Investment in Worton Corporation

4.An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a.$4,350 gain
b.$400 gain
c.$400 loss
d.$16,800 loss

5.On January 1, 2010, Blanton Company’s Valuation Allowance for Trading Investments account has a debit balance of $22,500. On December 31, 2010, the cost of the trading securities portfolio was $80,000. The fair value was $98,000. Which of the following would Blanton report?
a.an Unrealized Loss on Trading Investments of $4,500.
b.an Unrealized Gain on Trading Investments of $4,500.
c.an Unrealized Gain on Trading Investments of $18,000.
d.an Unrealized Loss on Trading Investments of $18,000.

6.On April 1, 2010, Stanton Company purchased $50,000 of Harris Company’s 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2010, Stanton received its first semiannual interest. On February 1, 2011, Stanton sold $40,000 of the bonds at 103 plus accrued interest. The journal entry Stanton will record on April 1, 2010, will include:
a.a credit to Interest Payable for $2,000.
b.a debit to Investments – Harris Company for $52,000.
c.a credit for Cash of $50,000.
d.a debit to Investments – Harris Company for $50,000.

financi4 answers:

I personally love pancakes. Hbu?

John asks…

Not sure about this question?

An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What’s the amount of gain or loss on the sale?

a) $12,750 gain

b) $600 gain

c) $600 loss

d) $9,250 loss
i think it’s B

financi4 answers:

You are right; it is b.

Cost basis/share= $21,750/500=$43.50/sharex100 shares=$4,350

Sales $4,950
Cost – 4,350
______
Gain 600

James asks…

Accounting Help Please?

1. An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?
a. $12,750 gain
b.$600 gain
c. $600 loss
d. $9,250 loss

2. An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $47.50 per share. What is the amount of gain or loss on the sale?
a. $4,350 gain
b. $400 gain
c. $400 loss
d. $16,800 loss

financi4 answers:

1. A

2. B

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Your Questions About Stocks And Bonds Basics

Robert asks…

Reading a Company’s Annual Report at an Investor’s Standpoint?

I am young and new to investing, especially in the stock market. I have to admit that I have not yet gain broader principles and tactics on investing other than the basics, nor that I have the necessary capital to risk in investing an any other securities that aren’t as protective as cash equivalencies (money market account, savings bond, certificate of deposits, etc) but I am ready to do extensive research on companies I’m willing to invest in. And my research had lead me to a company’s annual report.

I had a glimpse of my potential company’s annual report, but man, it was longer than I anticipated. In addition, I don’t know exactly how I’m suppose to ‘go about’ analyzing the information in it. Although not left in the dark, I was overwhelmed.

Can somebody give me some pointers in deciphering an annual report? Other than the obvious, could someone advise me on what areas of an annual report that fundamental investors strongly considers looking at over the rest?
Okay, ANY kind of help would suffice.

financi4 answers:

The Annual Report, or 10-K in investor parlance, is the summary of the company’s operating performance in a given year. The first page of any annual report (apart from the glossy marketing material) is a standard page identifying the dates that are covered, the number of outstanding of shares, and the given value of the shares.

It is generally useful to have a minimum of 5 annual reports for a given company: the 10-k of the given year, the 10-k from some prior year (best if it was an especially tough last year), the 10-k of a competitor from the same year and also from another prior year, and a 10-k from a company that does business with your company.

Why so much reading? The point is to get a perspective on how the company is doing business. The annual report typically has a section called the MD&A, or manager’s discussion and analysis. Read this! It gives an idea of what the numbers mean in the given economic enviroment (or at least, it should make things clearer…what is management considering, reporting, etc?)

The next section of real importance is the financial numbers: look for the balance sheet (and look sharply at the numbers!). Does the company carry a lot of debt? Does the company have adequate credit? What assets are being claimed? (lots of accounts payable in liabilities? Lots of accounts receivable and little cash? Etc.)

Then, turn your eyes to the Income Statement. How is the company making money? Do you know the company’s model? Strategic advantage, or ‘edge’? Do the numbers make sense? (Here is where having prior statements helps, or having a competitor’s statement helps.) If the company says it will grow earnings by 20%…is this claimed by its competitors as well? Maybe the whole market is growing (excellent!) Or maybe the market is shrinking, but this company is tough as nails.

Finally, check the Cash Flows. Though this is a short-sighted look at a company’s operations, many investors like to see this because it is hard to really cloud the cash picture. You either have cash, or you don’t.

Start by reading a book like “Financial Intelligence.” It will help you go through more of the finer points of the annual report. Look on www.footnoted.org, the lady there has an excellent book on reading annual reports/quarterlies and spotting financial ‘red flags.’ Michelle Leder’s “Financial Fine Print” is excellent.

Then, look at your company’s “footnotes.” Remember always that the annual report is a “PR communication” from the CEO / management to investors.**Think critically!

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Your Questions About Stocks And Bonds

William asks…

How can I be sure that my grandmother did not own any stocks, bonds, mutuals, CD, realestate.?

My grandmother died a few weeks ago and the trustee doesn’t seem to know. Is there ONE source I can go to to find this out?

financi4 answers:

No. You need to play detective. Search through her belongings. Check safe deposit boxes. Call the banks and brokerage firms she might have done business with. Check her financial records, checkbooks, etc.

Check the states unclaimed property website for any property she may have forgotten about.

Joseph asks…

My IRA has a mix of stocks, bonds and cash and has been averaging around 7% for the past few years.?

Is this an above average rate of return or below?
My wife and I are about 10 years away from retirement.

financi4 answers:

I would say this is better than average. The stock market hasn’t been that good the last couple of years.

Also, having bonds in your investment mix usually results in a lower return. (Keep in mind, that having bonds in your portfolio will protect you if the stock market really goes down.)

Good luck.

James asks…

Stocks, bonds, mutual funds and saving account, other?

What are the positives and negatives of:
stocks
bonds
mutual funds
saving accounts
anything else thats out there?

financi4 answers:

This could be a 10 page paper.
Positives:
Stocks good long-term investment returns on average 10 percent per year over the long term. Very liquid
Bonds – Relatively safe interest income investment. Very liquid.
Mutual funds – Investment in stocks without having to manage the portfolio. Fairly liquid..
Savings Account – quickly available in emergencies. Completely liquid.
Real Estate: Limited quantity is always in demand, keeps up with inflation.

Negatives:
Stocks – Require careful management, can fluctuate in the short term.
Bonds – No growth, does not keep up with inflation
Mutual funds – Fees paid for managers who are not able to do better than average.
Savings account – Low yield
Real estate – Not liquid, may require long time to sell.

Paul asks…

Differentiate between stocks,bonds and shares?

When does one tell the right time to buy and/ sell shares ,stocks and/bonds ?

financi4 answers:

Where to start…

Http://en.wikipedia.org/wiki/Investing

George asks…

Should money I deposit into an IRA be put into stocks, bonds, or mutual funds? Or leave them in the default?

I’m just wondering if I should deposit these into stocks or bonds… Is there fees associated with doing this (I use Fidelity to manage my assets).

Currently, all the money is in a “money market” account, FDRXX I believe is the symbol. This pays dividents (interest) monthly.

Is it common to split Roth IRA money into stocks or bonds? Yes/No and Why?

financi4 answers:

Why not ask the folks at Fidelity for advice?

If you’re new to investing, I suggest staying with mutual funds, which can include both stocks and bonds. It’s good to have your retirement account invested in both stocks and bonds. Read some good books on investing. To start, I recommend Larry Swedroe’s THE ONLY GUIDE TO A WINNING INVESTMENT STRATEGY YOU’LL EVER NEED.

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Your Questions About Purchased Songs On Iphone To Computer

Mark asks…

How do i get songs i purchased on my Iphone to my computer?

I purchased songs using itunes on my phone. When i plug it into the computer in itunes how do I transfer it from my iphone to my computer. I just can’t figure it out! I tried clicking and dragging the song to the music bar but it won’t work.
Someone help please!

financi4 answers:

All you have to do is synchronize the iPhone with iTunes. That transfers all purchases into iTunes.

William asks…

how do I transfer my purchased songs (from iphone 4G) to itunes playlist?

I am syncing my iphone to iTunes right now, and have downloaded a few songs through my iphone. However, I am trying to drag it to a playlist so that I can burn a CD, but it will not let me drag it. How can I put my purchased songs (from the iphone, not the songs I purchased on my computer) to a playlist? Or will it not let me because it’s not purchased through my computer?

financi4 answers:

There is a way, hope it can help you.1 Turn off the automatic syncing feature on your iPhone if you do not want everything in your iTunes library on your computer to be added automatically to the iPhone without asking you first. This is an especially good idea if you will be connecting your iPhone to more than 1 computer on a regular basis, because it will prevent you from accidentally overwriting files from your primary computer. To prevent auto-syncing, you must first connect your iPhone to the computer with the USB connector that comes with your iPhone.

2 Select your iPhone from the device list within the side panel of the iTunes library after iTunes opens, which should happen automatically anytime you connect your iPhone. Click on the tab labeled “Summary” and uncheck the “Automatically sync when this iPhone is connected” button if it is checked. If it is not already checked, then your iPhone is already set to prevent auto-syncing and in either case, you will still be able to sync your iPhone manually by clicking on the button labeled “Sync.”

3 Use the tabs in the iTunes side panel to choose the types of media playlists you would like to sync between your computer and iPhone. The iPhone allows you to transfer playlists of music, videos, podcasts and audiobooks. It is important to note that only 1 type of media can be included on each playlist.

4 Allow iTunes to create a special playlist automatically if you have more music on your computer than will fit on your iPhone. If your iPhone has reached its storage limit, a message from iTunes will pop up and ask you if you would the program to create a playlist full of random songs from your library, which will then automatically sync to your iPhone. You can customize the random playlist by adding or deleting songs of your choice and then simply syncing it again with your iPhone by pressing the “Sync” button in iTunes.

5 Keep in mind that you can only sync playlists from your computer with 1 iPhone at a time. Always make sure to be logged into your own Apple account when updating your iPhone and remember to disconnect one iPhone before adding a new one. Failure to do so may cause your iPhone to sync incorrectly, possibly erasing content from your iPhone.

Steven asks…

Songs Purchased on iphone lost after update?

i just reccently updated my iphone to the 2.0 version. i had to upload all my songs over again onto my iphone, because they were deleted with the update. i had bought 4 songs on my iphone in the itunes store. it was the first time plugging my iphone into the computer since i bought the songs. do i have to re-purchase these songs? or is there some way to recover them?

financi4 answers:

You should not have to buy them all over again but if you know what the songs are you can search them on itunes and click purchase. When you click purchase they might say something like you have already purchased this would you like to restore it or something similar but press ok but if this doesn’t work you will have to buy them over again

Chris asks…

How do I transfer a purchased song from my iPhone to iTunes on my computer?

I recently bought a song from the iTunes store on my iPhone and when I went to sync my phone to my computer nothing happened. I’m using the same account on my phone as I am on my computer. Help!

financi4 answers:

That’s because syncing is the other way around. ITunes, top left, File>Transfer purchases. Learn more in your user guide at Apple.com/support and in iTunes Help and Tutorials.

David asks…

How do you get songs purchased from your phone into your iTunes on your computer?

The songs i purchased on my iPhone‘s iTunes will not show up in my iTunes on my computer! It’s the same account though. I also bought some songs on my dads computer… and there’s no way to get that song on my mom’s computer. I’m trying to make a CD, but it says I’ll have to buy the same song again! Heck no

financi4 answers:

Apple will give you the songs for free if you contact them.

Richard asks…

How do i get purchased songs back on my iphone?

I recently had to restore my iphone and i hadnt synced with my computer for about a month or so. So after the restore, all of the songs i had purchased within the last month have been deleted. How do i get them back…… They are NOT on my computer. And if i try to buy them again, it still charges me the price of the song. Please Help

financi4 answers:

Your going to have to email itunes for a one time re-grant. Just select music purchases and then lost or missing items. Fill out the info and itunes should get back to you within 24 hours

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Your Questions About Stocks And Bonds 2012

David asks…

Prepare a statement of cash flows for the Crosby Corporation.?

CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000
Gross profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
Selling and administrative expense . . . . . . . . . . . . . . . . . . . . 420,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Statement of Retained Earnings
For the Year Ended December 31, 2008
Retained earnings, balance, January 1, 2008 . . . . . . . . . . . . . . . . . . . . $500,000
Add: Earnings available to common stockholders, 2008 . . . . . . . . . . 150,000
Deduct: Cash dividends declared and paid in 2008 . . . . . . . . . . . . . 50,000
Retained earnings, balance, December 31, 2008 . . . . . . . . . . . . . . . . . $600,000
Comparative Balance Sheets
For 2007 and 2008
Year-End
2007
Year-End
2008
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000 $ 100,000
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000 430,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,000 910,000
Investments (long-term securities) . . . . . . . . . . . . . . . . . . . 80,000 70,000
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,400,000
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . 1,000,000 1,150,000
Net plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,250,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 50,000
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000 890,000
Long-term liabilities:
Bonds payable, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 120,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,010,000
Stockholders’ equity:
Preferred stock, $100 per value . . . . . . . . . . . . . . . . . . . . . . 90,000 90,000
Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000
Capital paid in excess of par . . . . . . . . . . . . . . . . . . . . . . . . 410,000 410,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 600,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,000 1,220,000
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
28. Describe the general relationship between net income and net cash flows from
operating activities for the firm.
29. Has the buildup in plant and equipment been financed in a satisfactory manner?
Briefly discuss.

financi4 answers:

Crosby Corporation
Statement of Cash Flows
Year Ended December 31, 2008

Cash flows from operating activities
Net income available to common stockholders $150,000
Adjustments to reconcile net income to cash flows from operations
Increase in accounts receivable (50,000)
Increase in inventory (20,000)
Decrease in prepaid expenses 20,000
Increase in accounts payable 190,000
Decrease in accrued expenses (20,000)
Depreciation expense 150,000
Net cash flows from operating activities $420,000

Cash flows from investing activities
Cash received from sale of long-term investments 10,000
Cash used to purchase equipment (400,000)
Net cash flows from investing activities (390,000)

Cash flows from financing activities
Cash received from sale of long-term bonds payable 50,000
Cash used to pay dividends (50,000)
Net cash flows from financing activities 0

Net increase in cash $30,000

Cash balance, December 31, 2007 70,000

Cash balance, December 31, 2008 $100,000

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Your Questions About Invest In Gold Stock

Paul asks…

how to invest in Gold in the form of an equity stock?

Are there any exchange-traded stocks whose prices strictly follow the price of Gold?

financi4 answers:

Yes, there are several gold ETF’s. IAU and GLD are two of them that can be traded as you trade equities. You can even use limit orders on them. Just watch the expense ratio. For more information, go to the AMEX web site and look for ETF.

The alternative is to buy a stock of a gold mining company. There are literally dozens of them, some of the more popular ones being RGLD, ASA, NEM, AUY, GG.

Steven asks…

Is this a good time to invest in Gold producers stocks?

financi4 answers:

That depends on whether you think we will get inflation or deflation. I think we will get the latter. As a result of my bias, it is very easy for me to find evidence of this:
– house prices still falling
– gas prices are coming down, even during the peak driving season
– savings rate is up

Here’s a deflation sign that the mai nstream news competely missed: in current dollar value (not accounting for inflation/deflation), the GDP actually dropped *more* than expected. The better than expected real GDP number was a result of lower than expected inflation: almost 0, actually.

Http://biz.yahoo.com/c/ec/200931.html
Expectations: -1.5% real GDP + 1.0% chain deflator =
-0.5% current dollar GDP

Actual: -1% real GDP + 0.2% chain deflator =
-0.8% current dollar GDP

This is akin to your salary dropping more than you expected, but your buying power dropped less than you expected because prices rose less than you thouhgt they would.

So my opinion is that this is a good time to SELL gold. We’ll see if the stock market can stay up through the Fall.

Mark asks…

What is the best way to buy gold – etfs or physical gold? Also need info on ETFs…?

I am strongly considering investing in gold. But from what I see on here some people on here recommend buying ETFs and some seem to think physical gold is at least okay. Also, is an ETF like a share of gold stock. Please tell me more about ETFs and how they are traded. For all of the above please provide sources and or your credentials below your answer.

financi4 answers:

Gold ETFs: you trade them like funds or stocks. Pros: fast trading, low premium over the actual gold value. Drawbacks: quality of the management matters, fees vary, you really need to read the prospectus (e.g. Some ETFs lease gold to 3rd parties – i.e. The gold is physically not really there), it may not be backed 100% by gold but just 90%, etc.. It really depends -> prospectus and a lot of research. But, gold ETF is taxed as a mutual fund, which can result in slightly lower capital gain tax than physical gold..

Physical gold: you pay a premium (usually $50-70 over spot with 1 ounce coins). But then, you also get the premium back (partly) when selling gold (even if you sell on ebay, you still get more than the spot price – check out http://www.goldprice.org/ebay-gold-prices/). Pros: You hold the physical and you know it’s 100% there, in any type of meltdown. Govt doesn’t need to know you have them or you sold them (purchases under $10,000 or sales up to 25 ounces don’t have to be reported) -> consider capital gains tax. If you buy from BBB A rated dealers you can be sure it’s genuine. Drawbacks: you need a safe place (safe at home or safe deposit $100-300/year), shipping cost when buying online ($30-50). If you believe there may be a serious market crash (exchanges may be down and ETFs not tradeable), this is the better option.

Allocated gold: this is a compromise between an ETF and physical gold. You are a partial owner of a standard 400oz gold bar. The total cost of gold ownership about the same or lower as ETFs. Gold is held as bailment, i.e. You really hold title to it. Only two companies offer this so far: BullionVault and GoldMoney. Pros 24/7/365 instant transactions, low cost, gold is 100% physically there unlike many ETFs. Drawbacks: possibly higher taxation than ETFs or coins..

All in all, my favorite would be probably gold coins (and silver coins too > gold to silver ratio tends to get narrower in crisis times so silver may appreciate more if the dollar hits the fan, plus silver is much more practical – 1oz coin is worth only $20 so you can actually effectively use it for daily transactions etc..) .. But that’s my opinion. I’m very conservative and don’t trust the management of most funds.

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