CVS Caremark Corp. (CVS) 5.3% bonds due in 2043, sold for 113.04. Were the bonds selling at a premium or at a discount? Explain.
> What is the meaning of (a) 2/10, n/30; (b) n/90; (c) n/eom?
> Describe how the periodic method differs from the perpetual method of accounting for merchandise inventory.
> Is the Supplies balance before the accounts have been adjusted the amount that should normally be reported on the balance sheet? Explain.
> How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?
> Describe the nature of the assets that compose the following sections of a balance sheet: (a) current assets, (b) property, plant, and equipment.
> (a) Explain the purpose of the accounts Depreciation Expense and Accumulated Depreciation. (b) Is it customary for the balances of the two accounts to be equal? (c) In what financial statements, if any, will each account appear?
> Would AT&T and Microsoft use the cash basis or the accrual basis of accounting? Explain.
> Assume that Larsh Realty Inc. borrowed $75,000 from Country Bank and Trust. In recording the transaction, Larsh erroneously recorded the receipt as an increase in cash, $75,000, and an increase in fees earned, $75,000. (a) How would this error affect the
> Assume that Esquire Consulting erroneously recorded the payment of $30,000 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, statement of stockho
> The following financial data were adapted from a recent annual report of Target Corporation (TGT) for the year ending January 31. Accounts payable …………………………………………. $ 7,759 Cash ……………………………………………………………… 2,210 Common stock ……………………………………………………. 53 Cost of
> What particular item of financial or operating data appears on both the income statement and the statement of stockholders’ equity? What items appear on both the balance sheet and the statement of stockholders’ equity? What item appears on both the balan
> Using the January 1 and December 31, 20Y8, data given in Question 10, answer the following question: If Sylvester Consulting paid $18,000 of dividends during 20Y8, what was the amount of net income for 20Y8? Data from Question 10: Assume that as of Janu
> Briefly describe the nature of the information provided by each of the following financial statements: the income statement, the statement of stockholders’ equity, the balance sheet, and the statement of cash flows. In your descriptions, indicate whether
> For each of the following errors, indicate whether the error would cause the accounting equation to be out of balance and, if so, indicate how it would be out of balance. (a) The purchase of land for $85,000 cash was recorded as an increase in land of $8
> The three business activities are financing, investing, and operating. Using South west Airlines, give an example of each type of activity.
> A business’s stakeholders can be classified into capital market, product or service market, government, and internal stakeholders. Will the interests of all the stakeholders within a classification be the same? Use bankers and stockholders of the capital
> Provide an example of a transaction that affects (a) only one element of the accounting equation, (b) two elements of the accounting equation, (c) three elements of the accounting equation.
> Assume that a friend of yours operates a family-owned pharmacy. A super Wal-Mart, scheduled to open in the next several months, will also offer pharmacy services. What business emphasis would your friend use to compete with the Super Walmart pharmacy?
> Both KIA and BMW produce and sell automobiles. Describe and contrast the business emphasis of KIA and BMW.
> Why are most large companies like Apple, Pepsi, General Electric, and Intel organized as corporations?
> The financial statements at the end of Paradise Realty’s first month of operations are shown below. Instructions: 1. Would you classify a realty business such as Hamel Realty as a manufacturing, mercha
> What is the difference between a manufacturing business and a service business? Is a restaurant a manufacturing business, a service business, or both?
> What is the difference between a manufacturing business and a merchandising business? Give an example of each type of business.
> What are the basic elements of a financial accounting system? Do these elements apply to all businesses, from a local restaurant to Alphabet (Google) Inc.? Explain.
> The following data are taken from the financial statements of Outdoor Patio Inc. Terms of all sales are 2/10, n/60. a. For Years 2 and 3, determine (1) the accounts receivable turnover and (2) the days’ sales in recei
> The bond indenture for the 10-year, 8% debenture bonds dated January 2, 20Y8, required working capital of $200,000, a current ratio of 2.0, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y9, the three
> PepsiCo, Inc. (PEP), the parent company of Frito-Layâ„¢ snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years: a. Determine the (1) current ratio and (2) quick ratio f
> The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8: a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio.
> Income statement data for Yellowstone Images Inc. for the years ended December 31, 20Y5 and 20Y4, are as follows: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. R
> Balance sheet data for a company for the years ended December 31, 20Y2 and 20Y1, are shown below. Prepare a comparative balance sheet for 20Y2 and 20Y1, stating each asset as a percent of total assets and each liability and stockholdersâ€
> Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
> The amounts of the assets and liabilities of Glacier Travel Service as of September 30, 20Y6, the end of the current year, and its revenue and expenses for the year are listed below. The retained earnings were $150,000 and the common stock was $50,000 as
> Leadbetter Inc. reports the following for 20Y3: a. Prepare a partial income statement for Lead better Inc. beginning with income from continuing operations before income tax. b. Assuming 75,000 common shares and no preferred shares, calculate the earni
> The table below shows recent stock prices, earnings per share, and dividends per share for three companies. a. Determine the price-earnings ratio and dividend yield for the three companies. Round to one decimal place. b. Discuss the differences in thes
> The following information was taken from the financial statements of Monarch Resources Inc. for December 31 of the current year: The net income was $1,300,000, and the declared dividends on the common stock were $460,000 for the current
> The balance sheet for Shryer Industries Inc. at the end of 20Y9 indicated the following: Income before income tax was $3,400,000, and income taxes were $1,000,000 for the current year. Cash dividends paid on common stock during the current year total
> The following comparative income statement (in thousands of dollars) for two recent years was adapted from the annual report of Speedway Motorsports, Inc. (TRK), owner and operator of several major motor speedways, such as the Atlanta, Bristol, Charlotte
> The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets, determine the following: (a) debt ratio, (b) ratio of &ium
> Macy’s, Inc. (M), sells merchandise through company-owned retail stores and Internet website. Recent financial information for Macy’s is provided below (all numbers in millions). Assume the apparel in
> The following selected data were taken from the financial statements of The O’Malley Group Inc. for December 31, 20Y5, 20Y4, and 20Y3: No dividends on common stock were declared between 20Y3 and 20Y5. a. Determine the r
> Three major transportation segments and a major company within each segment are as follows: a. Determine the asset turnover for all three companies. Round to two decimal places. b. Interpret the differences in the asset turnover in terms of the operat
> Recent balance sheet information for two companies in the snack food industry, The Hershey Company (HSY) and Mondelez International, Inc. (MDLZ), is as follows (in millions of dollars): a. Determine the debt ratio for both companies. Round to one decim
> 1. Compare the asset turnover ratios for Delta Air Lines (see the chapter illustration), United (MBA 7-5), Southwest (MBA 7-6), and JetBlue (MBA 7-7). Use Year 2 of Delta and JetBlue for your comparison. 2. Comment on the results from part (1). Data fro
> Hasbro (HAS) and Mattel, Inc. (MAT), are the two largest toy companies in North America. Liability and stockholders’ equity data from recent balance sheets are shown for each company below (in millions): The income from operations and
> The following data were taken from the financial statements of Starr Construction Inc. for December 31, 20Y6 and 20Y5: The income before income tax was $2,816,000 and $2,640,000 for the years 20Y6 and 20Y5, respectively. a. Determine the
> Costco Wholesale Corporation (COST) and Wal-Mart Stores Inc. (WMT) compete against each other in general merchandise retailing, gas stations, pharmacies, and optical centers. Below is selected financial information for both companies from
> The following data were extracted from the income statement of Brecca Systems Inc.: a. Determine for each year (1) the inventory turnover and (2) the days’ sales in inventory. Round to nearest dollar and one decimal place. b. What c
> Bassett Stores Company and Fox Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two re
> Revenue and expense data for Searle Technologies Co. are as follows: a. Prepare an income statement in comparative form, stating each item for both 20Y8 and 20Y7 as a percent of sales. Round to one decimal place. b. Comment on the significant changes d
> ProTech Inc. provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year’s vacation pay is $432,000. Illustrate the effects on the accounts and financial statements of t
> According to a summary of the payroll of Kirby Co., $180,000 in earnings were subject to the 7.5% FICA tax. Also, $60,000 in earnings were subject to state and federal unemployment taxes. a. Calculate the employer’s payroll taxes, using the following rat
> In the following summary of data for a payroll period, some amounts have been intentionally omitted: Compute the amounts omitted in lines (1), (3), (7), and (11). Earnings: 1. At regular rate ? 2. At overtime rate $120,000 3. Total earnings ? Deduc
> JetBlue Airways Corporation (JBLU) operates passenger services throughout the United States. The following data (in millions) were adapted from recent financial statements of JetBlue. 1. Compute the asset turnover for Years 1 and 2. Roun
> An employee earns $28 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 46 hours during the week. Assume that the FICA tax rate is 7.5% and that federal income tax of $200 was withheld. a. Dete
> A business issued a 90-day, 7% note for $30,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the note and (b) the payment of the note at maturity, including interest.
> Zahn Inc. sold 16,000 annual magazine subscriptions for $15 during December 20Y4. These new subscribers will receive monthly issues, beginning in January 20Y5. Zahn Inc. issued a $48,000, 180–day, 5% note payable on December 1, 20Y4. On March 31, 20Y5, Z
> Premium Imports Inc. retails racing products for BMWs, Porsches, and Ferraris. The following accounts and their balances appear in the ledger of Premium Imports Inc. on November 30, the end of the current year: Forty thousand shares of preferred and 50
> The following accounts and their balances appear in the ledger of Young Properties Inc. on November 30 of the current year: Prepare the Stockholders’ Equity section of the balance sheet as of November 30. One hundred thousand shares o
> Indicate whether the following actions would (+) increase, (−) decrease, or (0) not affect Ballistic Scientific Inc.’s total assets, liabilities, and stockholders’ equity: Stockhol
> The date of declaration, date of record, and date of payment in connection with a cash dividend of $1,200,000 on a corporation’s common stock are June 1, July 15, and August 14, respectively. Illustrate the effects on the accounts and financial statements
> Based on the data in Exercise E8-1, discuss factors other than earnings per share that should be considered in evaluating such financing plans. Data from Exercise 8-1: BSF Co., which produces and sells skiing equipment, is ï¬
> Banff Water Inc. bottles and distributes spring water. On April 2 of the current year, Banff Water Inc. reacquired 30,000 shares of its common stock at $33 per share. a. What is the balance of Treasury Stock on December 31 of the current year? b. Where w
> Sun Dance Gardens Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On June 3 of the current year, Sun Dance Gardens Inc. reacquired 28,000 shares of its common stock at $37 per share. a. What is the balance of Treas
> Southwest Airlines (LUV) operates passenger services throughout the United States. The following data (in millions) were adapted from a recent financial statement of Southwest. 1. Compute the asset turnover. Round to two decimal places.
> Blue Moon Water Supply Inc. bottles and distributes spring water. On July 17 of the current year, Blue Moon Water Supply reacquired 35,000 shares of its common stock at $60 per share. a. What is the balance of Treasury Stock on December 31 of the current
> On August 7, Easy Up Corporation, a wholesaler of hydraulic lifts, acquired land in exchange for 20,000 shares of $10 par common stock with a current market price of $14. Illustrate the effect on the accounts and financial statements of the purchase of th
> On January 29, Quality Marble Inc., a marble contractor, issued 75,000 shares of $10 par common stock for cash at $23 per share, and on May 31, it issued 100,000 shares of $4 par preferred stock for cash at $6 per share. a. Illustrate the effects on the
> The following note accompanied the financial statements for Goodyear Tire and Rubber Company (GT): We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to certain asbestos pr
> Several months ago, Cinnabar Chemical Company experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $1,000,000. The company is contesting the fine. In addition, an employee is
> Ford Motor Company (F) disclosed the following estimated product warranty payable for two recent years. Ford’s sales in its automotive sector were $135,782 million in Year 2 and $139,369 million in Year 1. Assume that the total paid o
> Cyber Tech Inc. produces and distributes fiber optic cable for use by telecommunications companies. Cyber Tech Inc. issued $50,000,000 of 20-year, 6% bonds on March 1 at their face amount, with interest payable on March 1 and September 1. The fiscal year o
> BSF Co., which produces and sells skiing equipment, is financed as follows: Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $
> A Caterpillar tractor acquired on January 12 at a cost of $180,000 has an estimated useful life of 25 years. Assuming that it will have no residual value, determine the depreciation for each of the first two years by (a) the straight-line method and (b) t
> Custer Construction Co. reported $8,300,000 for equipment and $4,950,000 for accumulated depreciation equipment on its balance sheet. Does this mean (a) that the replacement cost of the equipment is $8,300,000 and (b) that $4,950,000 is set aside in a sp
> United Continental Holdings, Inc., (UAL), operates passenger service throughout the world. The following data (in millions) were adapted from a recent financial statement of United. 1. Compute the asset turnover. Round to two decimal pla
> Four Corners Delivery Company acquired an adjacent lot to construct a new warehouse, paying $200,000 and giving a short-term note for $375,000. Legal fees paid were $6,000, delinquent taxes assumed were $4,100, and fees paid to remove an old building fro
> List the errors you find in the following partial balance sheet: CHICO COMPANY Balance Sheet December 31, 20Y7 Assets Total current assets $350,000 Replacement Cost Accumulated Book Depreciation Value Property, plant, and equipment: Land $ 250,000 $
> Apple, Inc., designs, manufactures, and markets personal computers (iPadâ„¢) and related software. Apple also manufactures and distributes music players (iPodâ„¢) along with related accessories and services, including the
> On January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $36,000,000, a price reflecting an $8,000,000 goodwill premium. On December 31, 20Y9, The Simmons Group determined that the goodwill from the NWS acquisition was im
> Dovetail Technologies Company acquired patent rights on January 6, 20Y5, for $1,500,000. The patent has a useful life of 8 years. On January 7, 20Y6, Dovetail Technologies successfully defended the patent in a lawsuit at a cost of $252,000. a. Determine
> MacLean Mining Co. acquired mineral rights for $72,000,000. The mineral deposit is estimated at 120,000,000 tons. During the current year, 44,000,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. b. Illustra
> Equipment acquired on January 8, 20Y1, at a cost of $280,000, has an estimated useful life of 8 years and an estimated residual value of $30,000. a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line me
> Equipment acquired on January 9, 20Y3, at a cost of $560,000, has an estimated useful life of 20 years, an estimated residual value of $40,000, and is depreciated by the straight-line method. a. What was the book value of the equipment at the end of the
> The following data (in millions) were adapted from recent annual reports of United Parcel Service, Inc. (UPS). UPS provides delivery and freight services throughout the world. a. Compute the net property, plant, and equipment (book value) for Years 1 a
> Using the data in Exercise 6-7, assume that the allowance for doubtful accounts for Easy Rider International had a negative balance of $(13,300) as of December 31, 20Y3. Illustrate the effects of the adjustment for uncollectible accounts as of December 3
> The following data (in millions) were adapted from recent financial statements of CVS Health Corporation (CVS). 1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place. 2. Compute the daysâ€&#
> Easy Rider International is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follo
> Quantum Technologies, a computer consulting firm, has decided to write off the $13,000 balance of an account owed by a customer. Illustrate the effects on the accounts and financial statements to record the write-off (a) assuming that the direct write-off
> Illustrate the effects on the accounts and financial statements of the following transactions in the accounts of Kitchen Depot Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: July 3 Received
> Illustrate the effects on the accounts and financial statements of the following transactions in the accounts of Valley Care & Supplies Co., a local hospital supply company that uses the direct write-off method of accounting for uncollectible receivables:
> MGM Resorts International (MGM) owns and operates casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. For a recent year, the MGM Resorts International reported accounts and notes receivable of $562,947,000 and allowance for doubtful ac
> Determine the due date and the amount of interest due at maturity on the following notes: Date of Note Face Amount Interest Rate Term of Note January 15 April 1 a. $50,000 6% 30 days b. 27,000 4 90 days С. June 22 30,000 45 days d. August 30 90,000
> Based on the data in Exercise 6-18 and assuming that cost was determined by the FIFO method, show how the inventory would appear on the balance sheet. Data from Exercise 6-18: On the basis of the following data, determine the value of the inventory at t
> On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Inventory Quantity Market Value per Unit (Net Realizable Value) Product Cost per Unit Ad
> List any errors you can find in the following partial balance sheet: ZABEL COMPANY Balance Sheet December 31, 20Y4 Assets Current assets: Cash $ 75,000 Notes receivable $115,000 Less interest receivable 9,000 106,000 Account receivabl
> Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. 1. In each space below, place the correct sign [less than (), or equal (=)] for each comparison, assuming periods of rising prices. a. FIFO ending invent
> Compare and comment on Apple and HP using the results of MBA 6-6 and MBA 6-7. Data from MBA 6-6: The following data (in millions) were adapted from recent financial statements of Apple Inc (AAPL). 1. Compute the accounts receivable turn
> The units of an item available for sale during the year were as follows: There are 18 units of the item in the physical inventory at December 31. Determine the cost of ending inventory and the cost of goods sold by three methods, presenting your answer
> The units of an item available for sale during the year were as follows: There are 45 units of the item in the physical inventory at December 31. Determine the cost of ending inventory using (a) the first-in, first-out method, (b) the last-in, first-ou
> DreamWorks Animation SKG Inc. (DWA) shows “film costs” as an asset on its balance sheet. In the notes to its financial statements, the following disclosure was made: a. Interpret the fil
