Best Buy Co., Inc., reported the following amounts in its February 3, 2018, and January 28, 2017, financial statements.

($millions)	2018	2017
Sales revenue	$42,151	$39,403
Cost of sales	32,275	29,963
Net income (loss)	1,000	1,228
Total assets	13,049	13,856
Stockholders' equity	3,612	4,709

Compute Best Buy's debt-to-equity ratio as of February 3, 2018.

If Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to hold until the bond maturity date, the interest revenue recognized when each semiannual interest payment is received would be recorded as a

• a. credit to Cash,$2,500.
• b. credit to Interest Revenue, $2,500.
• c . debit to Held-to-Maturity Debt Investments,$2,500.
• d. debit to Dividend Revenue, $2,500.

Which of the following investments is most likely classified as a held-to-maturity investment? a. 80% stock ownership in a subsidiary b. 100% ownership in voting stock of a supplier c. IO-year bonds d. None of the above

Assume Intervale Railway is considering investing in Pale Co. stock for three months. The investment will represent 5% of the voting stock of Pale Co. How would the investment be classified? a. Significant interest investment b. Trading investment c. Held-to-maturity investment d. Controlling interest investment

Griffin purchased a bond on January 1, 2018, for $140,000. The bond has a face value of$140,000 and matures in 20 years. The bond pays interest on June 30 and December 31 at a 3% annual rate. Griffin plans on holding the investment until maturity.

Requirements

1. Journalize the 2018 transactions related to Griffin's bond investment. Explanations are not required.
2. Journalize the transaction related to Griffin's disposition of the bond at maturity on December 31, 2037. (Assume the last interest payment has already been recorded.) Explanations are not required.

You’ve collected the following information about Molino, Inc.:

Sales $= \$215,000$
Net income $= \$17,300$
Dividends $= \$9,400$
Total debt $= \$77,000$
Total equity $= \$59,000$

What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? What growth rate could be supported with no outside financing at all?

This problem continues the Canyon Canoe Company situation from Chapter 9. Amber and Zack Wilson are pleased with the growth of their business and have decided to invest its temporary excess cash in a brokerage account. The company had the following securities transactions in 2019.

• Jul.     1 - Purchased 8,000 shares in Adobe Outdoor Adventure Company for $3 per share. Canyon Canoe does not have significant influence over Adobe.
•           7 - Purchased 35% of the stock of Bison Backpacks consisting of 43,750 shares of stock (out of a total of 125,000 shares) for$5 per share. Canyon Canoe does have significant influence over Bison.
•         10 - Purchased a bond from Camelot Canoes with a face value of $80,000. Canyon Canoe intends to hold the bond to maturity. The bond pays interest semiannually on June 30 and December 31.
• Sep. 30 - Received dividends of$0.15 per share from Adobe.
• Nov.   1 - Received dividends of $0.30 per share from Bison.
• Dec. 31 - Received an interest payment of$3,200 from Camelot Canoes.
•         31 - Bison Backpacks reported net income of $30,000 for the year.
•         31 - Adjusted the Adobe stock for a market value of$2.98 per share.

Requirements

1. Journalize the transactions including any entries, if required, at December 31, 2019.
2. Determine the effect on Canyon Canoe Company's net income for the year for each of the three investments.

You’ve gathered the following information about Draiman, Inc.:

What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt–equity ratio? What growth rate could be supported with no outside financing at all?

Strategic Investments completed the following investment transactions during 2018:

• Jan.  14 - Purchased 800 shares of Phyflexon stock, paying $50 per share. The investment represents 4% ownership in Phyflexon's voting stock. Strategic does not have a significant influence over Phyflexon. Strategic intends to hold the investment for the indefinite future.
• Aug. 22 - Received a cash dividend of$0.24 per share on the Phyflexon stock.
• Dec. 31 - Adjusted the investment to its current market value of $45 per share.
•         31 - Phyflexon reported net income of$330,000 for the year ended 2018.

Requirements

1. Journalize Strategic's investment transactions. Explanations are not required.
2. Classify and prepare a partial balance sheet for Strategic's Phyflexon investment as of December 31, 2018.
3. Prepare a partial income statement for Strategic Investments for year ended December 31, 2018.

Peyton Investments completed the following investment transactions during 2018:

2018

• Jan.    5 - Purchased Vedder Company's $400,000 bond at face value. Peyton classified the investment as available-for-sale. The Vedder bond pays interest at the annual rate of 4% on June 30 and December 31 and matures on December 31, 2021. Management's intent is to keep the bonds for several years.
• Jun.  30 - Received an interest payment from Vedder.
• Dec. 31 - Received an interest payment from Vedder.
•         31 - Adjusted the investment to its current market value of$396,000.

Requirements

1. Journalize Peyton's investment transactions. Explanations are not required.
2. Prepare a partial balance sheet for Peyton's Vedder investment as of December 31, 2018.
3. Prepare a comprehensive income statement for Peyton Investments for year ended December 31, 2018. Assume net income was $200,000.

On January 1, 2018, the Chaucer's Restaurant decides to invest in Lake Turner bonds. The bonds mature on December 31, 2023, and pay interest on June 30 and December 31 at 4% annually. The market rate of interest was 4% on January 1, 2018, so the $90,000 maturity value bonds sold for face value. Chaucer's intends to hold the bonds until December 31, 2023.

Requirements

1. Journalize the transactions related to Chaucer's investment in Lake Turner bonds during 2018.
2. In what category would Chaucer's report the investment on the December 31, 2018, balance sheet?

Barot's 2018 financial statements reported the following items - with 2017 figures given for comparison:

$$\begin{array}{c}\hline\\ \textbf{BAROT, INC.}\\ \textbf{Balance Sheet}\\ \textbf{\hspace{60pt}As of December 31, 2018 and 2017\hspace{60pt}}\\ \end{array}$$

$$\begin{array}{lcc}\hline\\ &\textbf{2018}&\textbf{2017}\\ \text{Total Assets}&\text{\underline{\underline{\$\hspace{10pt}32,978}}}&\text{\underline{\underline{\$\hspace{10pt}30,660}}}\\\\ \text{Total Liabilities}&\text{\hspace{15pt}19,400}&\text{\hspace{15pt}11,560}\\ \text{Total Stockholders' Equity (all common)}&\underline{\text{\hspace{15pt}13,578}}&\underline{\text{\hspace{15pt}19,100}}\\ \text{Total Liabilities and Stockholders' Equity}&\text{\underline{\underline{\$\hspace{10pt}32,978}}}&\text{\underline{\underline{\$\hspace{10pt}30,660}}}\\\\\hline \end{array}$$

Net income for 2018 was $3,910, and interest expense was$240. Compute Barot's rate of return on total assets for 2018. (Round to the nearest percent.)

On June 1, 2018, Josh's Restaurant decides to invest excess cash of $54,400 from the tourist season by purchasing a Jackrabbit, Inc. bond at face value. At year-end, December 31, 2018, Jackrabbit's bond had a market value of$51,200. The investment is categorized as an available-for-sale debt investment and will be held for the short-term.

Requirements

1. Journalize the transactions for Josh's investment in Jackrabbit, Inc. for 2018.
2. In what category and at what value would Josh report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Jackrabbit's stock be reported, if at all?
3. What was the net effect of the investment on Josh's net income for the year ended December 31, 2018?

The management department at the university decides to add a new program in restaurant, hotel, and institutional management. As part of the development process, they hold focus groups consisting of area business leaders, current and former students, and restaurant and hotel owners. These groups can be described as _____________.

a. project leaders

b. project workers

c. stakeholders

d. clients