Note for AC 210 with Professor Huang at UA-Final Study Guide
Note for AC 210 with Professor Huang at UA-Final Study Guide
Popular in Course
Popular in Department
This 7 page Study Guide was uploaded by an elite notetaker on Friday February 6, 2015. The Study Guide belongs to a course at University of Alabama - Tuscaloosa taught by a professor in Fall. Since its upload, it has received 29 views.
Reviews for Note for AC 210 with Professor Huang at UA-Final Study Guide
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/06/15
Chapter 9 Equipment Journal Entry to record Purchase of an Asset Sales Tax Dr Equipment 22100 Installation Dr Supplies 800 Adjustment Cr Cash 22900 Supplies 800 Book Value of an Asset the value at which an asset is carried on a balance sheet Book Value Cost of an Asset Accumulated Depreciation 3 Depreciation Methods 0 Straight Line allocates the cost of an asset in equal periodic amounts over its useful life 0 Cost Residual Value 1Useful Life Depreciation Expense o Unitsof Production allocates the cost of an asset over its useful life based on the relationship of its periodic output to its total estimated output 0 Cost Residual Value Actual Production this PeriodEstimated Total Production Depreciation Expense o DecliningBalance assigns more depreciation to early years of an asset s life and less depreciation to later years 0 Cost Accumulated Depreciation 2Useful Life Depreciation Expense Depreciation of 0 Land CAN T be depreciated because land is assumed to have an unlimited useful life 0 Intangible Assets with Limited Life 0 Amartizatian allocates the cost of intangible assets over their limited useful lives 0 Goodwill Each year we must test to see if there has been any impairment in the carrying value of the goodwill If an impairment is determined to exist we will reduce the goodwill account and recognize the loss in value Effects ofAsset Impairment on nancial statement Assets Liabilities Stockholders Equity Rides and Equipment Impairment LossE 3200000 3200000 Dr Impairment Loss E SE 3200000 Cr Rides and EquipmentA 3200000 Gain if cash gt book value Loss if cash lt book value book value Fair Market Value Fixed Asset Turnover Ratio indicates dollars of sales generated for each dollar invested in fixed assets longlived tangible assets higher ratio greater efficiency Net Sales Average Net Fixed Assets Chapter 10 Quick Ratio whether liquid assets are sufficient to pay current liabilities higher the better able to quickly pay Cash Shortterm Investments Accounts Receivable Net Current Liabilities Labor Cost The sum of all wages paid to employees as well as the cost of employee benefits and payroll taxes paid by an employer Labor Cost Wage Expense Payroll Tax Expense Wage Expense Journal Entry Dr Wages and Salaries Expense ESE 60000 Cr Withheld Income Taxes Payable L 5800 Cr FICA Payable L 4880 Cr United Way Payable L 1000 Cr Cash A 48320 Interest and Principal Payment related to a note at maturity Journal Entry Establish the Note dr Cash A 100000 cr Notes Payable L 100000 Accrue Interest dr Interest Expense E SE 1000 cr Interest Payable L 1000 Record Interest Paid dr Interest Expense E SE 5000 dr Interest Payable L 1000 cr Cash A 6000 Record Principal Paid dr Note Payable L 100000 cr Cash A 100000 Bonds Issued at Premium Journal Entry dr Cash A 107260 cr Bonds Payable L 100000 cr Premium on Bonds Payable L 7260 Bonds Issued at Discount Journal Entry dr Cash A 93376 dr Discount on Bonds Payable xL L 6624 cr Bonds Payable L 100000 Premium Bonds Payable Financial Statement Assets Liabilities Stockholders Equity Cash A 107260 Bonds Payable L 100000 Premium on Bonds Payable L 7260 Discount Bonds Payable Financial Statement Assets Liabil es Stockholders39 Equity Cash A 93376 Bonds Payable L 100000 Discount on Bonds Payable xL L 6624 How Sales Tax affects nancial statements payments collected from customers at time of sale create a liability that is due to the state government Contingent liability potential liabilities that have arisen as a result of a past transaction or event their ultimate outcome will not be known until a future event occurs orfails to occur How to treat Contingent Liability must assess whetherthe contingencywill likely lead to a liability There are three possible outcomes 1 it is probable that we will incur a liability 2 it is possible that we may have a liability and 3 there is a remote chance of a liability being incurred If it is probable that we will have a liability and the amount ofthe liability can be reasonably estimated we record the estimated liability and estimated loss in our books If we cannot estimate the liability or if it is only possible that we will have a liability we are required to describe in contingency in the notes to the financial statements If it is only remote that a liabilitywill be incurred we do not record the contingency nor do we describe it in the financial statement Ratherwe do not mention the contingency at all Chapter 11 Authorized Shares maximum number of shares of capital stock of a corporation that can be issued as specified in the charter Issued Shares shares of stockthat have been distributed bythe corporation Treasury Stock issued shares that have been reacquired by the company Outstanding Shares shares that are currently held by stockholders not the corporation itself lnitial Issuance of Common Stock Journal Entry tr L39mh Al 000000 x 10 m Inmxnnn Hmck 5 Iomuoo x n mm quot41quot Hum 515 1000000 7 1000 1 00600 OH L000 90 I000 Repurchase of Common Stock Journal Entry LZSDDDO 50000 Dividend Declaration and Payment Journal Entry d7 Dmtleutls Decimal 1I 78E ELESOO 000 cr Dividends Payable l L 0800000 56800000 dv39 Divalends PBV JI IE L cr Caslx A 6500000 Effect of Dividend Declaration on Financial Statements once a dividend is declared the company records an increase in liabilities and a corresponding increase in the Dividends Declared amount Later closed to Retained Earnings at yearend causinga decrease in Retained Earnings Dividends on Preferred Stock may be paid at a fixed rate if dividends at all Preferred Dividend Distribution Dividends on preferred stock shares parvalue dividend Common Stockholders Dividend Distribution Dividends on Common Stock total dividends declared Dividends on Preferred Stock Return On Equity ROE Ratio the amount of income earned for each dollar of stockholder39s equity higher ratio stockholders are likely to enjoy greater returns Net Income Average Stockholde rs Eq uity Understand Impact ofh39ansaction on ROE Ell20 Determining the Effect ofa Stock Repurchase on EPS and ROE December 31 2009 Ma ch 31 2010 a 50000 5 50000 30000 30000 20000 20000 Total smzkhaidms39 Equity 100000 71 00 Required 2 Assume SPI repurchases 10000 of its common stock at a price of 2 per share on April 1 2010 Also assume that during the quarter ended June 30 2010 SPI reported Net Income of 5000 and declared and paid cash dividends totaling 5000 Calculate earnings per share EPS and return on equity ROE for the quarter ended June 30 2010 5000 ROE 80000 625 percent 10000 shares are repurchased for 20000 on April 1 2010 resulting in a Stockholders Equity balance of 80000 from April 1 June 302010 Chapter 12 Net Cash Flows from Operating Activities cash in ows and outflows related directlyto the revenues and expenses reported in the income statement Involve daytoday business activities with customers suppliers employees landlords and others Net Cash Flows from Investing Activities cash inflows and outflows related to the sale or purchase of investments and longlived assets Net Cash Flows from Financing Activities cash inflows and outflows related to financing sources external to the company owners and lenders Direct Method Cash collected from customers S 738 Cash paid to suppliers of inventory 369 Cash paid to employees and suppliers of services 251 Cash paid for interest 7 Cash paid for income tax Net cash provided by used in operating activities 79 Where Given Transactions should be Reported on Cash Flow Statement SCF Categories Classified Balance Sheet Categories Operating rentAssetsr CurrentgLiabiIities Investing No ncurrent Assets Noncurrent Liabilities Financing Stockholders Equity Reporting Change ofCurrent Assets and Current Liabilities on Cash Flow Statement Using Indirect Method UNDER ARMOUR INC Balance Sheet December 31 December 31 in 39llions 2008 2007 Change ASSETS Current assets Cash amp Cada Equivalents 102 40 62 Accounts Receivable 81 94 13 Inventories 182 166 16 Prepaid Expenses 31 22 9 Total Current Assets 396 322 Equipment 120 84 36 Less Accumulated depreciation 47 31 16 Intangible and Other Assets 18 16 2 Total Assets 487 391 UNDER ARMOUR INC Balance Sheet December 31 December 31 in millions 2008 2007 Change LIABILITIES amp STOCKHOLDERS39 EQUITY Current Liabilities Accounts Payable 72 55 17 Accrued Liabi 39 s 61 41 20 Total Current Lia 133 96 Longterm Debt 23 14 9 Total Liabilities 156 110 Stockholders39 Equity Contributed Capital 175 163 12 Retained Earnings 156 118 38 Total Stockholders39 Equity 331 281 Total Liab amp Stockholders39 Equitv 487 391
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'