Bravo Co. Balance Business, Accounting Homework Help

Question 1

 
Question 1 Unsaved

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

 Question 3 Unsaved

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

 Question 4 Unsaved

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

 Question 5 Unsaved

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

 Question 6 Unsaved

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

 Question 7 Unsaved

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

 
Question 8 Unsaved

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

 
Question 9 Unsaved

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

 
Question 10 Unsaved

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

 
Question 11 Unsaved

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

 
Question 12 Unsaved

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

 
Question 13 Unsaved

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

 
Question 14 Unsaved

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?