Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. For the most recent year, what amount does Buckle report for current assets? What is the ratio of current assets to total assets? 2. For the most recent year, what amount does Buckle report for current liabilities? What is the ratio of current liabilities to total liabilities? 3. For the most recent year, what is the change in retained earnings reported in the balance sheet? 4. For the most recent year, what is the amount of net income reported in the income statement? 5. Using your answers in 3 and 4 above, calculate the amount of dividends paid during the year. Verify your answer by looking at the retained earnings column in the statement of stockholders’ equity.
> What is a general ledger? How does it relate to the chart of accounts?
> Describe what we mean by posting. Post the transactions in Question 15 to appropriate T-accounts.
> What does a T-account represent? What is the left side of the T-account called? What is the right side called?
> Describe the events that correspond to the following transactions.
> Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2021, its balance for Accounts Receivable is $35,000. The company estimates that of this amount, $4,000 is not likely to
> Record each of the following external transactions using debits and credits. a. Receive cash of $1,200 for providing services to a customer. b. Pay rent of $500 for the current month. c. Purchase a building for $10,000 by signing a note with the bank.
> Explain the phrase “debits equal credits” with regard to journal entries.
> Provide the proper format for recording a transaction.
> What is a journal? What is a journal entry?
> Suzanne knows that an increase to an expense reduces retained earnings (a stockholders’ equity account). However, she also knows that expense accounts have a debit balance, while retained earnings normally has a credit balance. Are these two pieces of in
> Explain the difference between external transactions and internal transactions. If a company purchases supplies from a local vendor, would this be classified as an external or internal transaction?
> What are the three major legal forms of business organizations? Which one is chosen by most of the largest companies in the United States?
> What are a few of the typical operating activities for a company like Oracle Corporation, one of the world’s leading suppliers of software for information management?
> What are a few of the typical investing activities for a company like Caesars Entertainment, developer and operator of high end hotels and casinos?
> What are a few of the typical financing activities for a company like United Parcel Service, Inc. (UPS), the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services?
> Major League Products provides merchandise carrying the logos of each fan’s favorite major league team. In recent years, the company has struggled to compete against new Internet- based companies selling products at much lower prices. Andrew Ransom, in h
> What are the three basic business activities that financial accounting seeks to measure and communicate to external parties? Define each.
> What are the two primary functions of financial accounting?
> What is the basic difference between financial accounting and managerial accounting?
> What is the role of the auditor in the financial reporting process?
> What was the primary reason for the establishment of the 1933 Securities Act and the 1934 Securities Exchange Act? What power does the Securities and Exchange Commission (SEC) have?
> In general terms, explain the terms U.S. GAAP and IFRS.
> Which body is primarily responsible for the establishment of GAAP in the United States? What body serves this function on an international basis?
> What is meant by GAAP? Why should companies follow GAAP in reporting to external users?
> How does financial accounting have an impact on society?
> Identify some of the people interested in making decisions about a company.
> Roseburg Corporation manufactures cardboard containers. In 2017, the company purchased several large tracts of timber for $20 million with the intention of harvesting its own timber rather than buying timber from outside suppliers. However, in 2021, Rose
> In addition to financial statements, what are some other ways to disclose financial information to external users?
> What are the three types of cash flows reported in the statement of cash flows? Give an example of each type of activity for a company like Oakley, Inc., a designer, manufacturer, and distributor of high-performance eyewear, footwear, watches, and athlet
> “The retained earnings account is a link between the income statement and the balance sheet.” Explain what this means.
> Give some examples of the basic assets and liabilities of a company like Walmart.
> What is the accounting equation? Which financial statement reports the accounting equation?
> Give some examples of the basic revenues and expenses for a company like The Walt Disney Company.
> What does it mean to say that the income statement, statement of stockholders’ equity, and statement of cash flows measure activity over an interval of time, but the balance sheet measures activity at a point in time?
> What are the four primary financial statements? What basic information is shown on each?
> What are the major advantages and disadvantages of each of the legal forms of business organizations?
> Provide the basic definition for each of the account types: assets, liabilities, stockholders’ equity, dividends, revenues, and expenses.
> Did you know that you can get lots of financial information free of charge? Go to finance.yahoo.com. Use the quote lookup located on the left side to get financial information about any publicly traded company. Required: 1. For your company of choice, ob
> Explain what it means to say that an accounting class is not the same as a math class.
> Define the four basic assumptions underlying GAAP.
> What is meant by the term cost effectiveness in financial reporting?
> What are the three components/aspects of relevance? What are the three components/aspects of faithful representation?
> Discuss the terms relevance and faithful representation as they relate to financial accounting information.
> What are some of the benefits to obtaining a degree in accounting? What is the difference between a career in public accounting and private accounting? What are some of the traditional careers of accounting graduates? What new areas are accountants expan
> What are the three primary objectives of financial reporting?
> What is the “flip side” of an investment in equity securities?
> Provide an example of an equity investment in another company undertaken for strategic purposes.
> How might the investing activity for a company that operates a ski resort vary throughout the year?
> After years of steady growth in net income, Performance Drug Company reported a preliminary net loss in 2021. The CEO, Joe Mammoth, notices the following estimates are included in reported performance: 1. Warranty expense and liability for estimated futu
> How can an investor benefit from an equity investment that does not pay dividends?
> Explain why a company might invest in another company.
> Investments in debt securities are classified for reporting purposes in one of three categories. Explain each of these three categories.
> When interest rates go down, what happens to the value of an investment in bonds that pay a fixed interest rate?
> If bonds are purchased at a premium, what will happen to the carrying value of the investment in bonds and the amount recorded for interest revenue over time?
> If bonds are purchased at a discount, what will happen to the carrying value of the investment in bonds and the amount recorded for interest revenue over time?
> What is the “flip side” of an investment in debt securities?
> When is it appropriate to consolidate financial statements of two companies? Discuss your answer in terms of the relation between the parent and the subsidiary.
> Discuss the meaning of consolidated financial statements.
> Explain how we report dividends received from an investment under the equity method.
> Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate the following risk ratios for both companies for th
> Under what circumstances do we use the equity method to account for an investment in stock?
> When using the fair value method, we adjust the reported amount of the investment for changes in fair value after its acquisition. How is the change in fair value reflected in the balance sheet?
> When using the fair value method, we adjust the reported amount of the investment for changes in fair value after its acquisition. How is the change in fair value reflected in the income statement?
> Discuss the difference between an unrealized holding gain and a realized gain.
> Explain how we report dividends received from an investment under the fair value method.
> Tsunami Sushi purchases $130,000 of 5-year, 7% bonds from Deep Sea Explorers on January 1. Management intends to hold the debt securities to maturity. For bonds of similar risk and maturity, the market rate is 8%. Tsunami paid $124,728 for the bonds. It
> Star Studios is looking to purchase a new building for its upcoming film productions. The company finds a suitable location that has a list price of $1,600,000. The seller gives Star Studios the following purchase options: 1. Pay $1,600,000 immediately.
> Woody Lightyear is considering the purchase of a toy store from Andy Enterprises. Woody expects the store will generate net cash flows (cash inflows less cash outflows) of $60,000 per year for 20 years. At the end of the 20 years, he intends to sell the
> Mary Kate, Ashley, Dakota, and Elle each want to buy a new home. Each needs to save enough to make a 25% down payment. For example, to buy a $100,000 home, a person would need to save $25,000. At the end of each year for four years, the women make the fo
> Income statement and balance sheet data for The Athletic Attic are provided below. Required: 1. Calculate the following risk ratios for 2021 and 2022: a. Receivables turnover ratio. b. Inventory turnover ratio. c. Current ratio. d. Debt to equity ratio
> Financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Calculate the following risk ratios for the year ended February 3, 2018: a. Receivables turnover ratio. b. Average collection period. c. Inventory turnover r
> Data for The Athletic Attic are provided in P12–4B. Earnings per share for the year ended December 31, 2021, are $1.36. The closing stock price on December 31, 2021, is $22.42. Required: Calculate the following profitability ratios for 2021: 1. Gross pro
> The following income statement and balance sheets for The Athletic Attic are provided. Required: Assuming that all sales were on account, calculate the following risk ratios for 2021: 1. Receivables turnover ratio. 2. Average collection period. 3. Invent
> The balance sheets for Fantasy Football for 2021 and 2020 are provided below. Required: 1. Prepare a vertical analysis of Fantasy Football’s 2021 and 2020 balance sheets. Express each amount as a percentage of total assets for that year
> The income statements for Galaxy Tennis for the years ending December 31, 2021 and 2020, are provided below. Required: 1. Complete the “Amount” and “%” columns to be used in a horizo
> Game-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below. Required: 1. Complete the “%” columns to be used in a vertical a
> Cash flows from operating activities for both the indirect and direct methods are presented for Electronic Transformations. Required: Complete the following income statement for Electronic Transformations. Assume all accounts payable are to suppliers. [H
> Data for Virtual Gaming Systems are provided in P11–4B. Required: Prepare the statement of cash flows for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note.
> Refer to the information provided in P11–3B for Software Associates. Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the direct method.
> International Genetic Technologies (InGen) and The Resources Development Association (RDA) are companies involved in cutting-edge genetics research. Selected financial data are provided below: Required: 1. Calculate the return on assets for both companie
> The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note.
> Financial information for American Eagle is presented in Appendix A at the end of the book. Required: 1.Calculate the following risk ratios for the year ended February 3, 2018: a. Receivables turnover ratio. b. Average collection period. c. Inventory tur
> Portions of the financial statements for Software Associates are provided below. Required: Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method.
> Natalie King has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CPU Hardware Designers. All amounts are in thousands (000s). Below, in random order, are line items to be included in the statement of c
> Listed below are several transactions. For each transaction, indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F), or noncash (NC) activity. Also, indica
> Selected financial data for DC Menswear is provided as follows: Required: 1. Calculate the return on equity for DC Menswear. How does it compare with the return on equity for Facebook and IBM reported in the chapter? 2. Calculate the dividend yield for D
> National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2021, National League’s first year of operations: February 2 Issue 1.5 million shares
> Refer to the information provided in P10–2B. Required: Taking into consideration the beginning balances on January 1, 2021 and all the transactions during 2021, respond to the following for Nautical: 1. Prepare the stockholders’ equity section of the bal
> The stockholders’ equity section of The Seventies Shop is presented here. Required: Based on the stockholders’ equity section of The Seventies Shop, answer the following questions. Remember that all amounts are present
> The Athletic Village has done very well the past year, and its stock price is now trading at $102 per share. Management is considering either a 100% stock dividend or a 2-for-1 stock split. Required: Complete the following chart comparing the effects of
> Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2021, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholdersâ&
> Match (by letter) the following terms with their definitions. Each letter is used only once. Definitions a. A debit balance in Retained Earnings. b. Priced high in relation to current earnings as investors expect future earnings to be higher. c. Effectiv
> Income statement and balance sheet data for Great Adventures, Inc., are provided below. As you can tell from the financial statements, 2022 was an especially busy year. Tony and Suzie were able to use the money received from borrowing and the issuance of
> Selected financial data for Surf City and Paradise Falls are as follows: Required: 1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which company has the higher ratio? 2. Calculate the return on assets for
> Christmas Anytime issues $850,000 of 6% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: Calculate the issue price of a bond and complete the first three rows of an amortization schedule when 1. T
> Super Splash issues $1,000,000, 7% bonds on January 1, 2021, that mature in 15 years. The market interest rate for bonds of similar risk and maturity is 6%, and the bonds issue for $1,098,002. Interest is paid semiannually on June 30 and December 31. Req
> Temptation Vacations issues $60 million in bonds on January 1, 2021, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Required: 1. Were the bonds issued at face amount, a discount, or a p
> Viking Voyager specializes in the design and production of replica Viking boats. On January 1, 2021, the company issues $3,000,000 of 9% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Required: 1. If the
> Chunky Cheese Pizza has $61 million in bonds payable. The bond agreement states that the debt to equity ratio cannot exceed 3.25. Chunky’s total assets are $201 million, and its liabilities other than the bonds payable are $91 million. The company is con
> On January 1, 2021, Monster Corporation borrowed $9 million from a local bank to construct a new highway over the next four years. The loan will be paid back in four equal installments of $2,657,053 on December 31 of each year. The payments include inter
