Lance Berkman is the controller of Saturn, a dance club whose year-end is December 31. Berkman prepares checks for suppliers in December, makes the proper journal entries, and posts them to the appropriate accounts in that month. However, he holds on to the checks and mails them to the suppliers in January. Requirements: 1. What financial ratio(s) is (are) most affected by the action to hold onto the checks until January? 2. What is Berkman’s purpose in undertaking this activity?
> The owners of Sweet-Tooth Bakery have determined that they need to expand their facility in order to meet their increased demand for baked goods. The decision is whether to expand now with a large facility or expand small with the possibility of having t
> The Steiner-Wallace Corporation has determined that it needs to expand in order to accommodate growing demand for its laptop computers. The decision has come down to either expanding now with a large facility, incurring additional costs and taking the ri
> Zodiac Furniture is considering the production of a new line of metal office chairs. The chairs can be produced in-house using either process A or process B. The chairs can also be purchased from an outside supplier. Specify the levels of demand for each
> The design and effective capacities for a local emergency facility are 300 and 260 patients per day, respectively. Currently, the emergency room processes 250 patients per day. What can you conclude from these figures?
> The design and effective capacities for a local paper manufacturer are 1000 and 600 pounds of paper per day, respectively. At present, the manufacturer is producing 500 pounds per day. Compute capacity utilization for both measures. What can you conclude
> The town barber shop can accommodate 35 customers per day. The manager has determined that if two additional barbers are hired, the shop can accommodate 80 customers per day. What are the design and effective capacities for the barber shop?
> Beth’s Bakery can comfortably produce 60 brownies in one day. If Beth takes some unusual measures, such as hiring her two aunts to help in the kitchen and work overtime, she can produce up to 100 brownies in one day. a) What are the design and effective
> A manufacturer of printed circuit boards has a design capacity of 1000 boards per day. The effective capacity, however, is 700 boards per day. Recently, the production facility has been producing 950 boards per day. Compute the design and effective capac
> Joe’s Tasty Burger has determined that its production facility has a design capacity of 400 hamburgers per day. The effective capacity, however, is 250 hamburgers per day. Lately Joe has noticed that output has been 300 hamburgers per day. Compute both d
> The Bakers Dozen Restaurant is considering opening a new location. It has considered many factors and identified the ones that are most important. Two locations are being evaluated based on these factors, using factor rating. Each location has been evalu
> Sue and Joe are a young married couple who are considering purchasing a new home. Their search has been reduced to two homes that they both like, at different locations. They have decided to use factor rating to help them make their decision. They have l
> The owners of Speedy Logistics, a company that provides overnight delivery of documents, are considering where to locate their new facility in the Midwest. They have narrowed their search down to two locations and have decided to use factor rating to mak
> Shoeless Joe is a specialty retailer that is deciding where to locate a new facility. The annual fixed and variable costs for each possible site have been estimated as follows: Location Fixed Costs Variable Costs A $70,000 $1/unit B $34,000
> Easy-Tech Software Corporation is evaluating the production of a new software product to compete with the popular word processing software currently available. Annual fixed costs of producing the item are estimated at $150,000, and the variable cost is $
> Two workers have the job of placing plastic labels on packages before the packages are shipped out. The first worker can place 1000 labels in 30 minutes. The second worker can place 850 labels in 20 minutes. Which worker is more productive?
> What is benchmarking, and what are the two main types of benchmarks in financial statement analysis?
> Describe a common-size statement and how it might be helpful in evaluating a company.
> What is trend analysis, and how does it differ from horizontal analysis?
> What is horizontal analysis and how is a percentage change computed?
> What are the three main ways to analyze financial statements?
> In its annual report, XYZ Athletic Supply, Inc. includes the following five-year financial summary: Requirements: Analyze the company’s financial summary for the fiscal years 2014–2018 to decide whether to invest in
> Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to All Digital Corp. and Green Zone, Inc. and have assembled the following data. Selected income statement da
> Comparative financial statement data of Garfield, Inc. follow: 1. Market price of Garfield’s common stock: $69.36 at December 31, 2018, and $38.04 at December 31, 2017. 2. Common shares outstanding: 14,000 on December 31, 2018 and 12,
> Financial statement data of Modern Traveler’s Magazine include the following items: Cash …………………
> Consider the data for Randall Department Stores presented in Problem P15-31B. Problem P15-31B: The Randall Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company’s profit performance and financial p
> If current assets other than cash increase, what is the effect on cash? What about a decrease in current assets other than cash?
> The Randall Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company’s profit performance and financial position with the averages for the industry. The CEO has given you the company’s
> Net sales revenue, net income, and common stockholders’ equity for Azbel Mission Corporation, a manufacturer of contact lenses, follow for a four-year period. Requirements: 1. Compute trend analyses for each item for 2017â€
> In its annual report, ABC Athletic Supply, Inc. includes the following five-year financial summary: Requirements: Analyze the company’s financial summary for the fiscal years 2014–2018 to decide whether to invest in
> Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to Digitalized Corp. and Every Zone, Inc. and have assembled the following data. Selected income statement da
> Comparative financial statement data of Sanfield, Inc. follow: 1. Market price of Sanfield’s common stock: $51.48 at December 31, 2018, and $37.08 at December 31, 2017. 2. Common shares outstanding: 16,000 on December 31, 2018 and 15,
> Financial statement data of Style Traveler Magazine include the following items: Cash ……………………
> Consider the data for Klein Department Stores presented in Problem P15-24A. Problem P15-24A.: The Klein Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company’s profit performance and financial posi
> The Klein Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company’s profit performance and financial position with the averages for the industry. The CEO has given you the company’s i
> Net sales revenue, net income, and common stockholders’ equity for Eyesight Mission Corporation, a manufacturer of contact lenses, follow for a four-year period. Requirements: 1. Compute trend analyses for each item for 2017â
> Use Target Corporation’s Fiscal 2015 Annual Report to answer the following questions. Visit http://www.pearsonhighered.com/Horngren to view a link to the Target Corporation Annual Report. Requirements: 1. Compute trend analyses for Sales and Net earning
> If a company experienced a loss on disposal of long-term assets, how would this be reported in the operating activities section of the statement of cash flows when using the indirect method? Why?
> Data for Oxford State Bank follow: Evaluate the common stock of Oxford State Bank as an investment. Specifically, use the three stock ratios to determine whether the common stock has increased or decreased in attractiveness during the past year. Round
> Micatin, Inc.’s comparative income statement follows. The 2017 data are given as needed. Requirements: 1. Calculate the profit margin ratio for 2019 and 2018. 2. Calculate the rate of return on total assets for 2019 and 2018. 3. Calcu
> Big Beautiful Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you gather the following data: Compute t
> The financial statements of Valerie’s Natural Foods include the following items: Compute the following ratios for the current year: a. Current ratio b. Cash ratio c. Acid-test ratio d. Inventory turnover e. Days’ sa
> Data for Research Enterprises follows: Compute the dollar amount of change and the percentage of change in Research Enterprise’s working capital each year during 2019 and 2018. What do the calculated changes indicate? 2019 2018 20
> Refer to the data presented for Mulberry Designs, Inc. in Exercise E15-13. Exercise E15-13.: Data for Mulberry Designs, Inc. follow: Requirements: 1. Prepare a comparative common-size income statement for Mulberry Designs, Inc. using the 2018 and 201
> Theta Designs, Inc. has the following data: Perform a vertical analysis of Theta Designs’ balance sheet for each year. THETA DESIGNS, INC. Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Assets Total Current Assets
> Data for Mulberry Designs, Inc. follow: Requirements: 1. Prepare a horizontal analysis of the comparative income statement of Mulberry Designs, Inc. Round percentage changes to one decimal place. 2. Why did 2018 net income increase by a higher percenta
> The following data are adapted from the financial statements of Bridget’s Shops, Inc.: Total Current Assets ………………………….…………………………..$ 1,216,000 Accumulated Depreciation ……………………………..………….……2,000,000 Total Liabilities ………………………………………………………..………1,540,000 P
> Grand Oaks Realty’s net revenue and net income for the following five-year period, using 2015 as the base year, follow: Requirements: 1. Compute a trend analysis for net revenue and net income. Round to the nearest full percent. 2. Wh
> Describe the three basic types of cash flow activities.
> Ross’s Lipstick Company’s long-term debt agreements make certain demands on the business. For example, Ross may not purchase treasury stock in excess of the balance of retained earnings. Also, long-term debt may not exceed stockholders’ equity, and the c
> The company wants to invest some of its excess cash in trading securities and is considering two investments, The Paddle Company (PC) and Recreational Life Vests (RLV). The income statement, balance sheet, and other data for both companies follow for 201
> Amazon.com, Inc. serves its customers through its retail Web sites, selling millions of unique products. In addition, the company manufactures and sells electronic devices including Kindle e-readers and Fire tablets. Amazon.com also offers Amazon Prime,
> Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities. Short Exercise S14A-12: Amy’s Learning Center has assem
> Amy’s Learning Center has assembled the following data for the year ended June 30, 2018: Payments to suppliers ……………………….…………………….…………………………$ 115,000 Cash payment for purchase of equipment ………………………………………………39,000 Payments to employees ……………………………………………
> Jelly Bean, Inc. began 2018 with cash of $58,000. During the year, Jelly Bean earned revenue of $595,000 and collected $614,000 from customers. Expenses for the year totaled $427,000, of which Jelly Bean paid $212,000 in cash to suppliers and $205,000 in
> Jennifer’s Wedding Shops earned net income of $27,000, which included depreciation of $16,000. Jennifer’s acquired a $119,000 building by borrowing $119,000 on a longterm note payable. Requirements: 1. How much did Jennifer’s cash balance increase or de
> Use the Preston Media Corporation data in Short Exercise S14-7 and the results you calculated from the requirements. Prepare Preston Media’s statement of cash flows— indirect method—for the year ended
> Use the data in Short Exercise S14-5 to complete this exercise. Prepare Winding Road Cellular’s statement of cash flows using the indirect method for the year ended April 30, 2018. Assume beginning and ending Cash are $48,000 and $52,20
> How does the statement of cash flows help users of financial statements?
> Winding Road Cellular accountants have assembled the following data for the year ended April 30, 2018: Prepare the operating activities section using the indirect method for Winding Road Cellular’s statement of cash flows for the year
> DVR Equipment, Inc. reported the following data for 2018: Income Statement: Net Income ………………………………………….………………………………………..$ 43,000 Depreciation Expense …………………………………………………………………………6,000 Balance Sheet: Increase in Accounts Receivable ………………………………………………………
> Financial statements all have a goal. The statement of cash flows does as well. Describe how the statement of cash flows helps investors and creditors perform each of the following functions: a. Predict future cash flows. b. Evaluate management decision
> Red Toy Company reported the following comparative balance sheet: Requirements: 1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled $134,000. 2. Compute the payments for inventory during 2018. Cost of Goods
> Companies can use a spreadsheet to complete the statement of cash flows. Each item that follows is recorded in the transaction analysis columns of the spreadsheet. a. Net income b. Increases in current assets (other than Cash) c. Decreases in current li
> Julie Lopez Company expects the following for 2018: • Net cash provided by operating activities of $148,000. • Net cash provided by financing activities of $56,000. • Net cash used for investing activities of $77,000 (no sales of long-term assets). • Cas
> Preston Media Corporation had the following income statement and balance sheet for 2018: Requirements: 1. Compute the acquisition of plant assets for Preston Media Corporation during 2018. The business sold no plant assets during the year. Assume the
> Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement: a. Increase in accounts payable b. Payment of dividends c. Decrease in accrued liabiliti
> Cash flow items must be categorized into one of four categories. Identify each item as operating (O), investing (I), financing (F), or non-cash (N). a. Cash purchase of merchandise inventory b. Cash payment of dividends c. Cash receipt from the collecti
> Explain why depreciation expense, depletion expense, and amortization expense are added to net income in the operating activities section of the statement of cash flows when using the indirect method.
> What does the statement of cash flows report?
> Describe the five steps used to prepare the statement of cash flows by the indirect method.
> Describe the two formats for reporting operating activities on the statement of cash flows.
> Canyon Canoe Company’s comparative balance sheet is shown below. 2019 amounts are assumed, but include several transactions from prior chapters. Additional data follow: 1. The income statement for 2019 included the following items: a.
> Why might a spreadsheet be helpful when completing the statement of cash flows?
> The 2018 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro disposed of a plant asset at book value in 2018. Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activitie
> Use the Sweet Valley data from Problem P14-41B. Problem P14-41B.: The 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow: Additionally, Sweet Valley purchased land of $20,900 by financing it 100% with longterm notes paya
> Diversion Rare Coins (DRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, DRC issued no par common stock for $450,000. b. Early in January, DRC made the following cash payments: 1. For store fixtures, $46,000
> The comparative balance sheet of Robeson Educational Supply at December 31, 2018, reported the following: Robeson’s transactions during 2018 included the following: Requirements: 1. Prepare the statement of cash flows of Robeson Edu
> The 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow: Additionally, Sweet Valley purchased land of $20,900 by financing it 100% with longterm notes payable during 2018. During the year, there were no sales of land, no re
> Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Benson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financ
> What types of transactions are reported in the non-cash investing and financing activities section of the statement of cash flows?
> Classic Rare Coins (CRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, CRC issued no par common stock for $525,000. b. Early in January, CRC made the following cash payments: 1. For store fixtures, $51,000 2.
> The 2018 comparative balance sheet and income statement of Appleton Group, Inc. follow. Appleton disposed of a plant asset at book value during 2018. Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activ
> Use the Rolling Hills, Inc. data from Problem P14-34A. Problem P14-34A: The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow: Additionally, Rolling Hills purchased land of $21,100 by financing it 100% with longterm n
> Boundary Rare Coins (BRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, BRC issued no par common stock for $475,000. b. Early in January, BRC made the following cash payments: 1. For store fixtures, $53,000 2
> The comparative balance sheet of Jackson Educational Supply at December 31, 2018, reported the following: Jackson’s transactions during 2018 included the following: Requirements: 1. Prepare the statement of cash flows of Jackson Edu
> The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow: Additionally, Rolling Hills purchased land of $21,100 by financing it 100% with longterm notes payable during 2018. During the year, there were no sales of land, no
> Accountants for Morganson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Morganson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and
> American Rare Coins (ARC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, ARC issued no par common stock for $450,000. b. Early in January, ARC made the following cash payments: 1. For store fixtures, $53,000 2
> Use the Boost Plus, Inc. data in Exercise E14-21 to prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method.
> A-One Mobile Homes reported the following in its financial statements for the year ended December 31, 2018: Requirements: 1. Compute the collections from customers. 2. Compute payments for merchandise inventory. 3. Compute payments of other operating e
> Details about a company’s cash flows appear in a number of places in the annual report. Use Target Corporation’s Fiscal 2015 Annual Report to answer the following questions. Visit http://www.pearsonhighered.com/Horngren to view a link to Target Corporati
> Consider the following facts: a. Beginning and ending Accounts Receivable are $24,000 and $20,000, respectively. Credit sales for the period total $68,000. b. Cost of goods sold is $77,000. c. Beginning Merchandise Inventory balance is $29,000, and endin
> The income statement and additional data of Value Corporation follow: a. Collections from customers are $13,000 more than sales. b. Dividend revenue, interest expense, and income tax expense equal their cash amounts. c. Payments to suppliers are the su
> The accounting records of Four Seasons Parts reveal the following: Compute cash flows from operating activities using the direct method for the year ended December 31, 2018. Payment of salaries and wages $ 34,000 Net income $ 21,000 Depreciation ex
> Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plans to purchase a truck for $23,000 and a forklift for $125,000 next year. In addition, it plans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019
> Dirt bikes, Inc. identified the following selected transactions that occurred during the year ended December 31, 2018: a. Issued 750 shares of $3 par common stock for cash of $17,000. b. Issued 5,100 shares of $3 par common stock for a building with a f
> Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company’s statement of cash flows—indirect method—for the year ended December 31, 2018. Assume investments are purchased with cash
> Rouse Exercise Equipment, Inc. reported the following financial statements for 2018: Requirements: 1. Compute the amount of Rouse Exercise’s acquisition of plant assets. Assume the acquisition was for cash. Rouse Exercise disposed of
> Consider the following facts for Java Jolt: a. Beginning and ending Retained Earnings are $45,000 and $70,000, respectively. Net income for the period is $60,000. b. Beginning and ending Plant Assets are $124,500 and $134,500, respectively. c. Beginning
> The income statement of Boost Plus, Inc. follows: Additional data follow: a. Acquisition of plant assets is $124,000. Of this amount, $108,000 is paid in cash and $16,000 by signing a note payable. b. Cash receipt from sale of land totals $20,000. Ther
