For each of the following, (I) identify the account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit or credit to identify the kind of entry that would increase the account balance.

k. Notes Payable

Equity Which of the two principles of taxation-the benefit principle or the ability-to-pay principle-do you think is more equitable. Explain your answer. Be sure to include in your answer how the two principles differ from one another.

The stockholders’ equity section of Leyland Corporation’s balance sheet at December 31 is presented here.

$$\begin{array}{c} \textbf{LEYLAND CORPORATION}\\ \textbf{Balance Sheet (partial)}\\ \end{array}$$

$$\begin{array}{lrr} \text{Stockholders’ equity}\\ \qquad\text{Paid-in capital}\\ \qquad\qquad\text{Preferred stock, cumulative, 10,000 shares authorized,}\\ \qquad\qquad\qquad\text{6,000 shares issued and outstanding}&\text{\$\hspace{7pt}600,000}\\ \qquad\qquad\text{Common stock, no par, 750,000 shares authorized,}\\ \qquad\qquad\qquad\text{580,000 shares issued}&\underline{\text{\hspace{6pt}2,900,000}}\\ \qquad\qquad\qquad\text{Total paid-in capital}&\text{\hspace{1pt}3,500,000}\\ \qquad\text{Retained earnings}&\underline{\text{\hspace{6pt}1,158,000}}\\ \qquad\text{Total paid-in capital and retained earnings}&\text{\hspace{1pt}4,658,000}\\ \qquad\text{Less: Treasury stock (6,000 common shares)}&\underline{\text{\hspace{19pt}32,000}}\\ \text{Total stockholders’ equity}&\underline{\underline{\text{\$\hspace{1pt}4,626,000}}}\\ \end{array}$$

Instructions

From a review of the stockholders’ equity section, answer the following questions.

(c) What is the par value of the preferred stock?

At the beginning of the year, Morgan Company had total assets of $425,000 and total liabilities of$260,000.

Required:

If, during the year, total liabilities increased by $85,000 and total stockholders’ equity decreased by$73,000, what is the amount of total assets at the end of the year?

Access a recent copy of The Coca-Cola Company’s SEC 10-K filing at www.coca-cola.com and answer:

What companies does Coca-Cola describe as significant equity method investments? How do these investments help Coca-Cola?

When calculating the weighted average cost of capital, the costs of which of the following types of capital include a ($1 - T$) multiplier, where $T$ is the effective tax rate?

a. Debt capital

b. Equity capital

c. Both (a) and (b)

d. Neither (a) nor (b)

For each of the following, (I) identify the account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit or credit to identify the kind of entry that would increase the account balance.

h. Unearned Revenue

Identify the item that best completes each of the descriptions below.

1. Chart    2. General ledger   3. Journal    4. Account    5. Source document

d. Increases and decreases in a specific asset, liability, equity, revenue, or expense are recorded in a(n) _____.

For each of the following, (I) identify the account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit or credit to identify the kind of entry that would increase the account balance.

c. Legal Expense

Indicate in which section of the balance sheet each of the following accounts is classified. Use the symbols CA for current assets, NCA for noncurrent assets, CL for current liabilities, LTL for long-term liabilities, and SHE for stockholders' equity.
b. Dividends Payable

The following financial statement data is from five separate companies:

Required
1. Answer the following questions about Company A:
a. What is the amount of equity on December 31, 2010?
b. What is the amount of equity on December 31, 2011?
c. What is the amount of liabilities on December 31, 2011?
2. Answer the following questions about Company B:
a. What is the amount of equity on December 31, 2010?
b. What is the amount of equity on December 31, 2011?
c. What is net income for year 2011?
3. Calculate the amount of assets for Company C on December 31, 2011.
4. Calculate the amount of owner investments for Company D during year 2011.
5. Calculate the amount of liabilities for Company E on December 31, 2010.

Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 30% of the company's present value, and you believe that at this capital structure the company's debtholders will demand a return of 6% and stockholders will require 11%. The company is forecasting that next year's operating cash flow (depreciation plus profit after tax at 40%) will be $68 million and that investment expenditures will be$30 million. Thereafter, operating cash flows and investment expenditures are forecast to grow by 4% a year. a. What is the total value of Icarus? b. What is the value of the company's equity?

______ is the total combined customer lifetime values of all the company's current and potential customers.

a. Customer-perceived value
b. Value proposition
c. Market share
d. Share of customer
e. Customer equity

The following financial statement information is from five separate companies:

Required

1. Answer the following questions about Company A:$~~~~$a. What is the amount of equity on December 31, 2014?$~~~~$b. What is the amount of equity on December 31, 2015?$~~~~$c. What is the amount of liabilities on December 31, 2015?
2. Answer the following questions about Company B:$~~~~$a. What is the amount of equity on December 31, 2014?$~~~~$b. What is the amount of equity on December 31, 2015?$~~~~$c. What is net income for year 2015?
3. Calculate the amount of assets for Company C on December 31, 2015.
4. Calculate the amount of owner investments for Company D during year 2015.
5. Calculate the amount of liabilities for Company E on December 31, 2014.