Question: Selected information based on the comparative

> Refer to the information for Zealock Bookstore in Problem 28. The following transactions relate to Year 5. (1) March 15, Year 5: Pays income taxes for Year 4. (2) June 30, Year 5: Repays the bank loan with interest. (3) July 1, Year 5: Obtains a new bank

> Zealock Bookstore opened a bookstore near a college campus on July 1, Year 4. Transactions and events of Zealock Bookstore during Year 4 follow. The firm uses the calendar year as its reporting period. (1) July 1, Year 4: Receives $25,000 from Quinn Zeal

> Refer to the information for Regaldo Department Stores as of January 31, Year 8, in Chapter 2, Regaldo Department Stores opened for business on February 1, Year 8. Transactions and events during February Year 8 were as follows. (1) February 1: Purchased

> Bob Hansen opens a retail store on January 1, 2013. Hansen invests $50,000 for all of the common stock of the firm. The store borrows $40,000 from a local bank. The store must repay the loan with interest for both 2013 and 2014 on December 31, 2014. The

> The balance sheet of Rybowiak’s Building Supplies on June 30, Year 12, appears nearby. The following transactions occurred during the month of July. (1) Sold merchandise on account for a total selling price of $85,000. (2) Purchased m

> Assume that LBJ Group (LBJ), a European engineering firm, engaged in the following six transactions during the year ended December 31, Year 3. LBJ applies U.S. GAAP and reports its results in millions of U.S. dollars. Give the journal entries to record (

> Analysis of transactions and preparation of income statement and balance sheet. Refer to the information for Patterson Corporation for January, Year 13, in Chapter 2, above. The following transactions occur during February. (1) February 1: The firm pays

> Analysis of transactions and preparation of income statement and balance sheet. Refer to the information for Moulton Corporation as of December 31, Year 12, in Chapter 2, Moulton Corporation opened for business on January 1, Year 13. It uses the accrual

> The following information is based on accounting data for Year 7 and Year 8 for China Oil Company (COC), a large petrochemicals company in China. COC applies IFRS, and reports its results in millions of U.S. Income Statement Items Year 8 Net Opera

> Conima Corporation, a Japanese construction firm, reported a balance in Income Taxes Payable of ¥3,736 million at the beginning of Year 7 and ¥14,310 million at the end of Year 7. Net income before income taxes for Year 7 totaled ¥73,051 million. Assume

> The accounting records of Callen Incorporated reveal the following for Year 7 and Year 8. Callen applies U.S. GAAP, and reports its results in thousands of euros. Income Statement Items For the Year Ended December 31, Year 8 Adminis

> Indicate the effects (increase, decrease, no effect) of the following independent transactions on (1) working capital (= current assets – current liabilities) and (2) the quick ratio, where accounts receivable are included but merchandise inventory is ex

> Indicate the immediate effects (increase, decrease, no effect) of each of the following independent transactions on (1) the rate of return on shareholders’ equity, (2) the current ratio, and (3) the liabilities to assets ratio. State any necessary ass

> Data taken from the financial statements of Arctagon, a steel manufacturer headquartered in the Netherlands, appear below (amounts in millions of euros). Arctagon acquired other steel companies during the three-year period. a. Compute the long-term deb

> Data taken from the financial statements of Kyoto Electric, a Japanese generator and provider of electric services, appear below (amounts in billions of Japanese yen). a. Compute the long-term debt ratio and the debt-equity ratio at the end of 2010, 20

> Data taken from the financial statements of Geneva S.A., a consumer foods company headquartered in Switzerland, appear as follows (amounts in millions of euros): a. Compute the current and quick ratios on December 31 of each year. b. Compute the cash f

> Data taken from the financial statements of FleetSneak, a designer and manufacturer of athletic footwear and apparel, appear as follows (amounts in millions of US$): a. Compute the current and quick ratios on May 31 of each year. b. Compute the cash fl

> The following information relates to Mickey Group, an entertainment company (amounts in millions of pounds sterling): a. Compute the fixed-asset turnover for each year. b. How well has Mickey Group managed its investment in fixed assets over the three

> The following information relates to the activities of Funtime, Inc., a manufacturer of toys (amounts in millions of euros): a. Compute the inventory turnover for each year. b. Compute the average number of days that inventories are held each year. c.

> The annual reports of Delta, Inc. and Sunny Day Company, two manufacturers of computers, reveal the information below for the current year (amounts in millions). Delta sells custom-order personal computers, primarily to individuals. Sunny Day sells highe

> EkaPhone, a Swedish firm specializing in communication networks, reported a balance in Inventories of SEK21,470 million at the beginning of Year 7 and SEK22,475 million at the end of Year 7. It also reported a balance in Trade (Accounts) Payable of SEK18

> The following data show four items from the financial statements of two companies for a recent year (amounts in millions of US$): a. Compute the rate of return on assets for each company and disaggregate ROA into profit margin and total assets turnover

> The following data show four items from the financial statements of two companies for a recent year (amounts in millions of US$): a. Compute the rate of return on assets for each company. Disaggregate the rate of return on assets into profit margin and

> Information taken from the annual reports of Mobilex, a petroleum company, for three recent years appears below (amounts in millions of US$): a. Compute the rate of return on equity for each year. b. Disaggregate the rate of return on equity into profi

> Information taken from recent annual reports of two retailers appears as follows (amounts in millions of US$). One of these companies is a discount store chain, and the other is a specialty retailer of apparel. Indicate which of these companies is the di

> Recent annual reports of two restaurant chains (Calem Incorporated and Garter Company) reveal the following (amounts in millions of US$): Calem operates a chain of restaurants featuring value-priced meals and owns all of its restaurants. Garter also se

> Exhibit 6.12 shows a simplified statement of cash flows for a period. Numbers appear on 11 of the lines in the statement. Other lines are various subtotals and grand totals; ignore these in the remainder of the problem. Assume that the accounting cycle i

> Exhibit 6.19 presents an abbreviated statement of cash flows for Largay Corporation for the current year (amounts in thousands of US$). After preparing this statement of cash flows for the current year, you discover that the firm sold an item of equipmen

> Market Star is a marketing services firm that creates advertising copy for clients and places the advertising in television, magazines, and other media. Accounts receivable represent amounts owed by clients, and accounts payable represent amounts payable

> Selected data for Finanka, a Finnish cellular phone manufacturer, appear below (amounts in millions of euros): a. Compute the amount of cash flow from operations for each of the four years using the indirect method. b. Discuss briefly the most importan

> The following items appear in the financial statements of Bamberger Enterprises for a recent year (amounts in thousands of US$): The changes in the current asset and current liability accounts were as follows: a. Compute the amount of cash flow from

> BigWing Company, a U.S. airplane manufacturer, reported a balance of $8,105 million in Inventory at the beginning of Year 7 and $9,563 million at the end of Year 7. Its income statement reported Cost of Products Sold of $45,375 million for Year 7. Comput

> The comparative balance sheets of Incloud Airlines show the following information for a recent year (amounts in thousands of US$): a. Prepare a statement of cash flows for Incloud Airlines for the year. Treat changes in non-operating assets as investin

> The comparative balance sheets of Dearing Incorporated show a balance in the Buildings and Equipment account at cost year-end of $17,369 million; a year earlier, the balance was $16,825 million. The Accumulated Depreciation account shows a balance of $5,

> The spreadsheet on the textbook’s Web site contains a dynamic version of the spreadsheet reproduced below: In the dynamic version of this spreadsheet available on the Web site, you can change any of the numbers in the yellow shaded se

> Refer to Exhibit 6.18, which provides items from the financial statements of Infotech Corporation. a. How much cash did Infotech pay during the year to its suppliers of goods? b. How much cash did Infotech pay during the year to its employees and suppl

> Exhibit 6.18 provides items from the financial statements of Infotech Corporation, a systems engineering firm, for the year. How much cash did Infotech collect from its customers during the year? Exhibit 6.18: Infotech Corporation Data from Income

> Jennings Company reported a balance in its Prepaid Rent (Advances to Landlord) account of $1,200 on January 1, 2014, for use of the building for the month of January 2014. On February 1, 2014, the firm paid $18,000 as the annual rental for the period fro

> Radion Corporation reported a balance in Income Taxes Payable of $78.1 million at the beginning of the year, $60.1 million at the end of the year, and income tax expense for the year of $161.5 million. Using the format of Exhibit 6.12, indicate the effec

> Gillette Limited borrowed £250 million on October 1 by issuing bonds. The debt carries an annual interest rate of 6%, which it must pay on April 1 and October 1 of each year. The debt matures 20 years after its issue date. Gillette’s accounting period en

> JAJ Incorporated reported a balance in retained earnings of $26,571 million at the beginning of the year and $28,132 million at the end of the year. Its dividends payable account increased by $233 million during the year. It reported net income for the y

> Yoshi Group reported in its reconciliation of net income to cash flow from operations a decrease in wages and salaries payable of ¥21 million during the year. It provided data showing that cash payments for wages and salaries to employees for the year we

> BrasPetro S.A., a large Brazilian petrochemical company, reported a balance of R$1,594.9 million in Accounts Receivable at the beginning of Year 7 and R$1,497.0 million at the end of Year 7. Its income statement reported total Sales Revenue of R$12,134.5

> The section showing cash flow from operations, using the indirect method, for Taylor Stores reported an increase in inventories of $5.7 million during the year. It reported also that the balance in accounts payable for inventories increased by $5.9 milli

> The section showing cash flow from operations, using the indirect method, for Electropin Company reported an increase in inventories during the year of $1,753 million and no change in accounts payable for inventories. The direct method would show cash pa

> Microchem Corporation reported a balance of €5,196 million in accounts receivable at the beginning of the year and €5,334 million at the end of the year. Its statement of cash flows using the direct method reported cash collections from customers of €33,

> Selected financial information for Oratel S.A.E. (Oratel), an Egyptian telecommunications firm, is shown in the following display for the years ended December 31, Year 13 and Year 12. Oratel applies Egyptian accounting standards and reports its results i

> Selected information from PharmaCare’s financial statements for the years ended December 31, Year 6 and Year 7, appear below. PharmaCare is a German pharmaceutical company that applies IFRS and reports its results in millions of euros (

> Selected information based on the comparative balance sheets for Solaronx Company (Solaronx), a U.S. defense manufacturer, appears in the following display for the years ended December 31, Years 10, 11, and 12. Solaronx applies U.S. GAAP and reports its

> Selected information based on the comparative balance sheets and income statements of Palmgate Company (Palmgate), a U.S. manufacturer of consumer products, for the years ended December 31, Years 7, 8, and 9, appears in the following display. Palmgate ap

> Selected information based on the comparative balance sheets for James John Corporation (James John), a U.S. clothing designer, manufacturer, and retailer, for the years ended March 31, Years 10, 11, and 12, appears next. James John applies U.S. GAAP and

> Selected income statement information for Years 11, 12, and 13 for SwissTek, a Swiss engineering firm. SwissTek applies U.S. GAAP and reports its results in millions of U.S. dollars. Compute the missing amounts for each of the three years. Year 13

> What is the key difference between an adjusting entry and a correcting entry?

> Selected income statement information for Novo Limited (Novo), a Hong Kong personal computer manufacturer, for the years ended March 31, Years 9 and 10. Novo applies Hong Kong financial reporting standards and reports its results in thousands of U.S. dol

> Magtelkom, a Hungarian telecommunications company, reported the following balance sheet information for Year 11 and Year 12. Magtelkom applies IFRS and reports in millions of Hungarian forints (HUF). During Year 12, Magtelkom declared and paid dividend

> Tesco Plc. is a British-based grocer and retailer chain. It uses the accrual basis of accounting and recognizes revenue at the time it sells goods or renders services. It applies IFRS and reports in pounds sterling (£). Indicate the amount of expense rec

> Sun Microsystems uses the accrual basis of accounting and recognizes revenue at the time it sells goods or renders services. It applies U.S. GAAP and reports in U.S. dollars. Indicate the amount of expenses (if any) the firm recognizes during the months

> Fonterra Cooperative Group Limited (Fonterra), a New Zealand dairy cooperative, uses the accrual basis of accounting and recognizes revenue at the time it sells products or renders services. Fonterra applies New Zealand accounting standards and reports i

> Neiman Marcus, a U.S. retailer, uses the accrual basis of accounting and follows U.S. GAAP. It recognizes revenue at the time it sells merchandise. Indicate the amount of revenue (if any) the firm recognizes during the months of February, March, and Apri

> Duke University, a U.S. university, provides tuition support for up to eight semesters of undergraduate education for up to two children of faculty and staff of the university. To qualify for this tuition benefit, the faculty or staff member must have at

> After winning America’s Next Top Model, Danielle Evans signed a contract with Ford Models, was named a spokesmodel for CoverGirl, and signed a contract for a photo spread in Elle magazine. Although Ford did not disclose the details of the contract, typic

> Selected data based on the balance sheet amounts for Finmest Corporation, a Finnish paper company, for four recent years appear in the following table. Finmest applies IFRS and reports its results in millions of euros (€). Compute the mi

> Selected balance sheet amounts for Kyoto Corporation, a Japanese construction firm, are shown in the following table for four recent years. Kyoto applies Japanese accounting standards and reports its results in billions of yen (Â¥). Compute the

> What is the purpose of the income statement?

> Jennings Group, a Malaysian investment management company, reported the following data for four recent years. Jennings applies Malaysian accounting standards and reports its results in millions of ringgit (RM). Compute the missing balance sheet amounts f

> The balance sheet or income statement classifies various items in one of the following ways: CA—Current assets NA—Noncurrent assets CL—Current liabilities NL—Noncurrent liabilities CC—Contributed capital RE—Retained earnings NI—Income statement item (rev

> The following information is based on the fiscal Year 7 balance sheet of Delicious Foods Group, a Belgian food distributor. Delicious Foods applies IFRS and reports its results in millions of euros. Prepare a balance sheet for Delicious Foods that uses a

> The following information is based on the balance sheet of Aracel, a Brazilian manufacturer of paper pulp, for Year 6. Aracel applies U.S. GAAP and reports its results in thousands of U.S. dollars. (Adapted from the financial statements of Aracruz Celulo

> Consider the following hypothetical scenario for Royal Dutch Shell (Shell), a Netherlands-based oil and gas firm. One of Shell’s oil rig platforms collapsed, creating damage to the seafloor as well as environmental damage to surrounding ocean water. Give

> The following hypothetical events relate to the Berlin Philharmonic. Indicate whether each transaction immediately gives rise to a liability under U.S. GAAP and, separately, IFRS. If the Berlin Philharmonic recognizes a liability, state the account title

> The following transactions relate to Hana Microelectronic Public Company Limited (Hana Microelectronic), an electronics and semiconductor firm headquartered in Thailand. Indicate whether each transaction immediately gives rise to a liability under U.S. G

> The following hypothetical transactions relate to Ryanair Holdings, Plc. (Ryanair), an Irish airline. Indicate whether each transaction immediately gives rise to an asset under U.S. GAAP and, separately, IFRS. If Ryanair recognizes an asset, state the ac

> The following hypothetical transactions relate to Nestlé S.A., the Swiss chocolate manufacturer. Indicate whether each transaction immediately gives rise to an asset of the company under U.S. GAAP and separately, under IFRS. If Nestlé recognizes an asset

> Consider the following hypothetical series of events. While shopping in a Nordstrom store on July 5, 2013, a customer slips on the escalator and falls, sustaining back and neck injuries. On January 15, 2014, the customer sues Nordstrom for $1 million. Th

> What does “articulation of the balance sheet with the income statement” refer to?

> Assume that Jennifer’s Juice (JJ), an organic food retailer in the United States, recently purchased a new refrigeration system for its Chapel Hill, North Carolina, store. JJ paid $1.3 million for the refrigeration unit and paid an additional $120,000 to

> In the fiscal year ended December 31, Year 14, Bostick Enterprises paid $120,000 for equipment that it had purchased on January 1, Year 14. The equipment has an expected useful life of 10 years and zero salvage value. The firm recorded the acquisition by

> Comparative balance sheet data for Bondier Corporation (Bondier), a Canadian airplane manufacturer, as of January 31, Year 8, and January 31, Year 7, appear in the following display, based on Bondier’s financial reports as of January 31

> An Israeli drug company (IDC) reported Net Sales of $9,408 million for the year ended December 31, Year 7. Based on IDC’s financial reports for fiscal Year 7, the cost of these sales was $6,531 million. Assume that IDC made all sales on credit, and that

> A firm generated net income for the current year, but cash flow from operations was negative. How can this happen?

> Under what circumstances will the rate of return on equity exceed the rate of return on assets? Under what circumstances will it be less?

> The acquisition of equipment by assuming a mortgage is a transaction that firms cannot report in their statement of cash flows but must report in a supplemental schedule or note. Of what value is information about this type of transaction? What is the re

> Some of the assets of one firm correspond to the liabilities of another firm. For example, an account receivable on the seller’s balance sheet is an account payable on the buyer’s balance sheet. For each of the following items, indicate whether it is an

> Accounting treats cash discounts taken on the purchase of merchandise or equipment as a reduction in the amount recorded for the assets acquired. What justification can you see for this treatment?

> Why is it important to separate the income from discontinued operations from the income from continuing operations on the income statement?

> Both interest expense on borrowing and dividends on common stock reduce net assets and reduce shareholders’ equity. Accountants treat interest as an expense in measuring net income but do not treat dividends on common stock as an expense. Explain the rat

> Distinguish between a cost and an expense.

> “The measurement of assets and liabilities relates closely to the measurement of revenues and expenses.” Explain.

> An entrepreneur claimed that her new company had generated both superior profit margin performance and superior asset turnover performance. Explain whether such an outcome is likely to happen.

> A Japanese car manufacturer (JCM) reported Sales of Products of ¥22,670 billion for the year ended March 31, Year 7. The Cost of Products Sold was ¥18,356 billion. Assume that JCM made all sales on credit. By March 31, Year 7, JCM had collected cash for

> Some have argued that for any given firm at a particular time, there is an optimal inventory turnover ratio. Explain.

> One company president stated, “The operations of our company are such that we must turn our assets over once every four weeks.” A company president in another industry stated, “The operations of our company are such that we can live comfortably with asse

> Explain why the return on equity of a company that has no preferred stock will be smaller than the return on equity of an otherwise similar firm that has preferred stock.

> A firm’s total assets turnover decreased, but its accounts receivable, inventory, and fixed asset turnover increased. Suggest possible explanations.

> In calculating return on assets, the simple ROA formula does not adjust for interest expense. Explain why is it technically more correct to make an adjustment for interest expense in calculating this ratio, and explain the form of the adjustment.

> “Financial ratios are useful metrics for relating two items in the financial statements. Interpreting changes in a particular financial ratio is difficult, however, because the explanation might relate to changes in the numerator, the denominator, or bot

> Given how financial leverage affects ROE, why does a firm not borrow as much as possible? That is, why doesn’t a firm increase borrowing to as close to 100% of financing as it can?

> The statement of cash flows classifies changes in accounts payable as an operating activity but classifies changes in short-term bank borrowing as a financing activity. Explain this apparent paradox.

> Under U.S. GAAP, the statement of cash flows classifies cash expenditures for interest on debt as an operating activity but classifies cash expenditures for dividends to shareholders as a financing activity. Explain this apparent paradox.

> The statement of cash flows classifies cash expenditures for interest expense as an operating activity but classifies cash expenditures to redeem debt as a financing activity. Explain this apparent paradox.