You must complete answer all questions – be a very careful
reader
5 Questions: 5
essays;
Q1
Will the income statement include the profits or losses from
the purchase and sale of treasury stock?
Yes or No? Include an example of a journal entry to purchase treasury
stock.
Q2
Explain the effect on Cash Received and Interest Expense
Recognized when
A. Bonds are
issued at Face Value
B. Bonds are
issued at a discount
C. Bonds are
issued at a premium
(Hint: your answer for each independent situation [A, B, and
C] should include the phrases “Credit to Bonds Payable” and “Contract Interest
Rate”)
Q3
The text describes two different methods for accounting for
investments in common stock. Describe
each of the methods and the situations in which each method would be
employed. Why are the investments
accounted for differently?
Q4
Explain the relationship between the balance sheet, the
income statement, and the statement of cash flows using the indirect method.
That is, how do you prepare a statement of cash flows using the indirect
method? Don’t use numbers but explain
the mathematical calculations and line items.
Q5
What do we learn by using the vertical analysis process for
a company when analyzing the income statement and the balance sheet? That is, how would you explain to someone
what you learn about a company by completing a vertical analysis of their SEC
10K income statement and balance sheet?
