D104 Intermediate Accounting OA 2 WITH complete expert solutions already graded A+

Asset Turnover Ratio

Net Sales / Average Total Assets

Profit Margin Ratio

Net Income / Total Sales

Rate of Return on Assets Formula

(Net Income / Net Sales) x (Net Sales / Average Total Assets)

Current Ratio

Current Assets / Current Liabilities

Debt to Asset Ratio

Total Liabilities / Total Assets

Acid Test Ratio

(Cash + Short Term Investments + Net Receivables) / Current Liabilities

Rate of Return on Common Stock Formula

(Net Income - Preferred Dividends) / Average Common Stockholder's Equity

Payout Ratio

Cash Dividents / (Net Income - Preferred Dividends)

Book Value per Share

Common Stockholder's Equity / Outstanding Shares

Times Interest Earned Ratio

(Net Income + Interest Expense + Income Tax Expense) / Interest Expense

Basic EPS Formula

(Net Income - Preferred Dividends) / Weighted Average # of Common Shares Outstanding

Straight Line Depreciation Method

(Cost - Salvage Value) / # of years

Serive Hours Depreciation Method

[(Cost - Salvage Value) / Total Service Hours] x Hours Used

Units of Output Depreciation Method

[(Cost - Salvage Value) / Total Units] x Units Produced

Activity Depreciation Method

[(Cost - Salvage Value) x hours this year] / Total estimated hours

Sum of the Years Depreciation Method

(Remaining Useful Life / Sum of the years digits) x (Cost - Salvage Value)

Double Declining Balance Depreciation Method

(Straight line rate x 2) x Net Book Value

What's the difference between Notes Payable and Accounts Payable?

Accounts payable tends to be for short term debt (a year)

Depletion Cost per Unit Formula

(Total Cost - Salvage Cost) / Total Estimated Units Available

A company had both outstanding convertible bonds and stock warrants during the current year. The company determined that if the bonds had been converted during the year, calculated basic earnings per share (EPS) would have decreased, and if the warrants had been exercised during the year, calculated basic EPS would have increased.

How should the company consider these securities when calculating and presenting diluted earnings per share on the income statement?

The company should include the effect of the bonds, but exclude the effect of the warrants.

On July 22, a company issues bonds at 105, bonds with a par value of $1,000,000, due in 20 years. Five years after the issue date, the company calls the entire issue at 101 and redeems it.

At that time, the unamortized premium balance is $37,500. What is the effect of this transaction?

$27,500 gain

Calculate the Book Value of the Bonds (1,000,000 + 37,500)

Calculate Cash Paid for redemption (1,000,000 x 1.01)

Subtract redemption from BVB ($1,037,500−$1,010,000=$27,500)