Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This material also is available under the Investor Relations link at the company’s website (www.target.com). Required: 1. What amount did Target report for total assets, total liabilities, and total shareholders' equity (labeled "Shareholders' investment) in the most recent year? Show that the basic accounting equation remains in balance. 2. (a) Find sales revenue (labeled “Sales”) in the income statement (labeled “Consolidated Statement of Operations”) and record sales for the year, assuming all sales were for cash. (b) Find total cost of goods sold (labeled “Cost of sales”) in the income statement and record the journal entry for cost of goods sold for the year. (c) Record inventory purchases for the year, assuming all were on account. (Hint: To calculate the amount of purchases, use a T-account for inventory and input the beginning and ending balances of inventory from the balance sheet. Input the credit to inventory from requirement 2(b) and solve for the missing amount to calculate inventory purchases). 3. Note 9 provides information on Target’s current assets. Assume all prepaid expenses are for prepaid insurance and that insurance expense comprises $50 million of the $16,233 million of selling, general, and administrative expenses reported in the income statement for the year ended February 1, 2020. How much cash did Target pay for insurance coverage during the year? Prepare the adjusting entry Target would make to record all insurance expense for the year. What would be the effect on the income statement and balance sheet if Target didn’t record an adjusting entry for prepaid expenses? 4. (a) By how much did retained earnings increase/decrease in the most recent year compared to the previous year? (b) Target reduces retained earnings for “Dividends declared” and “Repurchase of stock.” These two amounts totaled $2,865 million in the most recent year. Using this amount and your answer in (a), compute Target's net income. Verify your answer by finding net income (labeled “Net earnings”) in the income statement.
> Lance-Hefner Specialty Shoppes decided to use the dollar-value LIFO retail method to value its inventory. Accounting records provide the following information: Related retail price indexes are as follows: Required: Determine ending inventory and cost of
> Canova Corporation adopted the dollar-value LIFO retail method on January 1, 2024. On that date, the cost of the inventory on hand was $15,000 and its retail value was $18,750. Information for 2024 and 2025 is as follows: Required: 1. What is the cost-t
> On January 1, 2024, the Brunswick Hat Company adopted the dollar-value LIFO retail method. The following data are available for 2024: Required: Calculate the estimated ending inventory and cost of goods sold for 2024 using the information provided.
> SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Determine the carrying value of SLR’s inventory assuming that the lower of cost or market (LCM
> Aztec Corporation uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of September: The company used the average cost flow method and estimat
> LeMay Department Store uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to one of its largest departments for the month of March: Sales are recorded net of employee discounts.
> Almaden Valley Variety Store uses the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available: Required: Estimate the ending inventory and cost of goods sold, applying the conventional retail method
> Colonial Corporation uses the retail method to value its inventory. The following information is available for the year: Required: Determine ending inventory and cost of goods sold by applying the conventional retail method using the information provide
> San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost of goods sold. The following data are available for the month of October: Required: Estimate the average cost of ending inve
> In 1934, Congress created the Securities and Exchange Commission (SEC). Required: 1. Does the SEC have more authority or less authority than the FASB with respect to standard setting? 2. Can you think of any reasons why the SEC relies on private sector
> A key aspect of the Accounting Standards Codification is the structure used to organize content understanding that structure will help you utilize the codification efficiently and effectively. Required: Access the FASB Accounting Standards Codification
> The purpose of this case is to introduce you to the information available on the website of the Financial Accounting Standards Board (FASB). Required: Access the FASB home page on the Internet. The web address is www.fasb.org. Answer the following quest
> Portion. As one of your first assignments, you are examining a balance sheet prepared by a staff accountant // In the course of your examination you uncover the following information pertaining to the balance sheet: 1. The company rents its facilities.
> A conceptual question in accounting for derivatives is this: Should gains and losses on a hedge instrument be recorded as they occur, or should they be recorded to coincide (match) with income effects of the item being hedged? ABI Wholesalers plans to is
> Refer to the situation described in BE 9–15. What steps would be taken to report the error in the 2024 financial statements?
> The following is an excerpt from a disclosure note of Johnson & Johnson: 6. Fair Value Measurements (in part) As of January 3, 2021, the balance of deferred net gains on derivatives included in accumulated other comprehensive income was $652 million afte
> The Upward Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earning a rate of return of 21%. This rate seemed quite high so you called a friend who wor
> An all-league professional football player has just declared free agency. Two teams, the San Francisco 49ers and the Dallas Cowboys, have made the following offers to the player: 49ers: $1 million signing bonus payable immediately and an annual salary of
> Southwest Airlines provides scheduled air transportation services in the United States. Like many airlines, Southwest leases many of its planes from Boeing Company. In its long-term debt disclosure note included in the financial statements for the year e
> Johnson & Johnson is one of the world’s largest manufacturers of health care products. The company’s July 2, 2017, financial statements included the following information in the long-term debt disclosure note: The
> A company is considering replacing a machine used in the manufacturing process with a new, more efficient model. The purchase price of the new machine is $150,000 and the old machine can be sold for $100,000. Output for the two machines is identical; the
> A manager has performed well as the chief financial officer of the Maxtech Computer Company and has earned a bonus. The manager has a choice among the following three bonus plans: 1. A $50,000 cash bonus paid now. 2. A $10,000 annual cash bonus to be pai
> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C
> Ralph Lauren Corporation is a global leader in the design, marketing, and distribution of premium lifestyle products, including men’s, women’s and children’s apparel. Below are selected financial statements taken from a recent 10-K filing? Required: Use
> Rice Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2024, Rice’s controller prepared the following financial sta
> In 2024, Waterway International, Inc.’s controller discovered that ending inventories for 2022 and 2023 were overstated by $200,000 and $500,000, respectively. Determine the effect of the errors on retained earnings at January 1, 2024. (Ignore income tax
> Companies often voluntarily provide non-GAAP earnings when they announce annual or quarterly earnings. These numbers are controversial as they represent management’s view of permanent earnings. The Sarbanes Oxley Act (SOX), issued in 20
> Norse Manufacturing Inc. prepares an annual single, continuous statement of income and comprehensive income. The following situations occurred during the company’s 2024 fiscal year: 1. Restructuring costs were incurred due to the closing of a factory. 2
> The following events occurred during 2024 for various audit clients of your firm. Consider each event to be independent and the effect of each event to be material. 1. A manufacturing company recognized a loss on the sale of investments. 2. An automobile
> Each of the following situations occurred during 2024 for one of your audit clients: 1. An inventory write-down due to obsolescence. 2. Discovery that depreciation expenses were omitted by accident from 2023’s income statement. 3. The u
> Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Determine each of the following: 1. The topic number (Topic XXX) that addresses exit or disposal cost obligations. 2. The specific
> Performance and profitability of a company often are evaluated using the financial information provided by a firm’s annual report in comparison with other firms in the same industry. Ratios are useful in this assessment. Required: Obtain annual reports
> Refer to the income statement of The Home Depot, Inc., in Illustration 4–2 of this chapter. Required: 1. Is this income statement presented in the single-step or multiple-step format? 2. What is the company’s approximate income tax rate? 3. What is the
> Vodafone Group, Plc. a U.K. company, is the largest mobile telecommunications network company in the world. The company prepares its financial statements in accordance with International Financial Reporting Standards. Below are partial company balance sh
> The usefulness of the balance sheet is enhanced when assets and liabilities are grouped according to common characteristics. The broad distinction made in the balance sheet is the current versus long-term classification of both assets and liabilities. R
> Insight concerning the performance and financial condition of a company often comes from evaluating its financial data in comparison with other firms in the same industry. Required: Obtain annual reports from three corporations in the same primary indus
> In 2024, Clear Window and Glass changed its inventory method from FIFO to LIFO. Inventory at the end of 2023 is $150,000. Describe the steps Clear Window and Glass should take to report this change.
> Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are available in Connect. This m
> Examine the segment disclosures of Abbott Laboratories reported in Appendix 3 and answer the following questions. 1. Does Abbott Laboratories define its operating segments by business or geography? 2. Determine which business segment has the greatest amo
> Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in the Connect library. This material also is available under the Investor
> A common problem facing any business entity is the debt versus equity decision. When funds are required to obtain assets, should debt or equity financing be used? This decision also is faced when a company is initially formed. What will be the mix of de
> Obtain the quarterly financial report (10-Q) of Delta Airlines for the period ended June 30, 2020. You can access this report through the SEC’s EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system. You can also access this report at the c
> The fiscal year-end for the Northwest Distribution Corporation is December 31. The company’s 2024 financial statements were issued on March 15, 2025. The following events occurred between December 31, 2024, and March 15, 2025. 1. On January 22, 2025, the
> The balance sheet and disclosure of significant accounting policies taken from the January 31, 2020, annual report of Walmart Inc. appear below. Use this information to answer the following questions: 1. Does Walmart separately report current assets vers
> You recently joined the auditing staff of Best, Best, and Krug, CPAs. You have been assigned to the audit of Clear view, Inc., and have been asked by the audit senior to examine the balance sheet prepared by Clear view’s accountant. Re
> You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners, Alice Davis has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardware store. Mr. Pitt is applying to a
> A company has always kept its records on a cash basis. You are provided with the following transaction information for the fiscal year ending December 31, 2024: 1. A new comprehensive insurance policy requires an annual payment of $12,000 for the upcomin
> Air France-KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2019, are provided in Connect. This ma
> In 2024, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2023 of $127,000 would have been $145,000 if FIFO had been used. Inventory at the end of 2024 is $162,000 using the new FIFO method but would have been $151,0
> The following is an excerpt from ABC News: Required: 1. Why must Microsoft report this charge of over $1 billion entirely in one quarter, the last quarter of the company’s fiscal year? 2. When the announcement was made, analyst Richard
> As a second-year financial analyst for A.J. Straub Investments, you are performing an initial analysis on Reliant Pharmaceuticals. A difficulty you’ve encountered in making comparisons with its chief rival is that Reliant uses U.S. GAAP, and the competin
> IGF Foods Company is a large, primarily domestic, consumer Foods Company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy’s The Almanac of Business and Industrial
> A fellow accountant has solicited your opinion regarding the classification of short-term obligations repaid prior to being replaced by a long-term security. Cheshire Foods, Inc., issued $5,000,000 of short-term commercial paper during 2023 to finance co
> The following True blood case is recommended for use with this chapter. The case provides an excellent opportunity for class discussion, group projects, and writing assignments. The case, along with Professor’s Discussion Material, can be obtained from t
> Obtain the 2019 annual report of FCA Group (archived at www.stellantis.com), which manufactures Fiat-brand automobiles as well as other products. Required: Find FCA’s discussion of “Basis of Consolidation” in the “Significant Accounting Policies” note th
> The following are excerpts from the 2019 financial statements of Renault, a large French automobile manufacturer. / In view of this situation, Renault is considered to exercise significant influence over Nissan, and therefore uses the equity method to in
> General Motors invests in securities of other companies. Access GM’s 2019 10-K (which includes financial statements) using EDGAR at www.sec.gov. Required: 1. What is the amount and classification of any AFS investment securities reported in the balance s
> Microsoft’s 2020 10-K includes the following information relevant to its available-for-sale investments in Note 17—Accumulated Other Comprehensive Income (Loss): Required: 1. Prepare a journal entry to record unrealize
> A1 Electronics has one product in its ending inventory. Per unit data consist of the following: cost, $20; replacement cost, $18; selling price, $30; selling costs, $4. The normal profit is 30% of selling price. What unit value should A1 use when applyin
> The following disclosure note appeared in the July 27, 2019, annual report of Cisco Systems, Inc. Note 9: Available-for-Sale Debt Investments and Equity Investments (in part) Available-for-sale investments as of July 27, 2019, and July 28, 2018, were as
> Imani West, CEO of West Industries, stopped by the company’s finance department with a question. “I am considering having West Industries purchase bonds of Triton Corporation as an investment. Our auditor told me that ordinary changes in the market value
> Redline Publishers, Inc. produces various manuals ranging from computer software instructional booklets to manuals explaining the installation and use of large pieces of industrial equipment. At the end of 2024, the company’s balance sheet reported total
> EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, performs automated collection, validation, indexing, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange C
> Amgen, Inc. is an American multinational biopharmaceutical company headquartered in Thousand Oaks, California. Located in the Conejo Valley, Amgen is the world’s largest independent biotechnology firm. Amgen reported the following in a
> The Cummings Company charged various expenditures made during 2024 to an account called repairs and maintenance expense. You have been asked by your supervisor in the company’s internal audit department to review the expenditures to determine if they wer
> Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also to increase the value of stock options. Some resort to earnings management practices to artificially create desired results. Re
> At the beginning of 2022, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a 10-year service life and no residual value. The straigh
> The company controller, Barry Melrose, has asked for your help in interpreting the authoritative accounting literature that addresses the recognition and measurement of impairment losses for property, plant, and equipment and intangible assets. “We have
> There are various types of accounting changes, each of which is required to be reported differently. Required: 1. What type of accounting change is a change from the double-declining-balance method of depreciation to the straight-line method for previous
> Refer to the situation described in BE 8–6. Record (1) the purchase of inventory on account and (2) freight charges, assuming the company uses a periodic inventory system.
> At a recent luncheon, you were seated next to Mr. Hopkins, the president of a local company that manufactures bicycle parts. He heard that you were a CPA and made the following comments to you: Why is it that I am forced to recognize depreciation expense
> The terms depreciation, depletion, and amortization all refer to the process of allocating the cost of an asset to the periods the asset is used. Required: Discuss the differences between depreciation, depletion, and amortization as the terms are used in
> Whaley Distributors is a wholesale distributor of electronic components. Financial statements for the year ended December 31, 2024, reported the following amounts and subtotals ($ in millions): In 2025, the following situations occurred or came to light:
> After graduating near the top of his class, Ben Angele was hired by the local office of a Big 4 CPA firm in his hometown. Two years later, impressed with his technical skills and experience, Park Electronics, a large regional consumer electronics chain,
> British Telecommunications Plc. (BT), a U.K. company, is the world’s oldest communications company. The company prepares its financial statements in accordance with International Financial Reporting Standards. Locate BT’s statement of cash flows from its
> I’m so confused,” your study partner snarls, throwing up his hands in exasperation. “As part of our team’s group project, I need to find out how much cash Microsoft spent on leases l
> I doubt my eating these Cheerios will boost their ability to pay me dividends,” you quip, referring to General Mills, the maker of the best-selling breakfast cereal. It’s General Mills’ dividend-paying ability, in fact, that you plan to investigate right
> Be careful with that coffee!” Your roommate is staring in disbelief at the papers in front of her. “This was my contribution to our team project,” she moaned. “When you spilled your
> Locate the financial statements and related disclosure notes of FedEx Corporation for the fiscal year ended May 31, 2020. You can locate the report online at www.fedex.com. Use the information provided in the statement of cash flows to respond to the que
> You are a loan officer for First Benevolent Bank. You have an uneasy feeling as you examine a loan application from Daring Corporation. The application included the following financial statements. It is not Daring’s profitability that w
> A company purchased inventory on account for $100,000. Freight charges to have the inventory shipped to the company’s location were $5,000 (paid in cash). Record (1) the purchase of inventory on account and (2) freight charges, assuming the company uses
> Why can’t we pay our shareholders a dividend?” shouted your new boss. “This income statement you prepared for me says we earned $5 million in our first half-year!” You were hired las
> Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the cost of its ending inventory. Ending inventory quantities are determined by a physical count. For the fiscal yearend June 30, 2024, ending invento
> Late in 2024, you and two other officers of Carob Fabrications Corporation just returned from a meeting with officials of the City of Jackson. The meeting was unexpectedly favorable even though it culminated in a settlement with city authorities that you
> Ray Solutions decided to make the following changes in its accounting policies on January 1, 2024: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service contracts. b. Adopted straight-line depreciation for all
> Some inventory errors are said to be “self-correcting” in that the error has the opposite financial statement effect in the period following the error, thereby “correcting,” the original account balance errors. Despite this self-correcting feature, these
> Sometimes a business entity will change its method of accounting for certain items. The change may be classified as a change in accounting principle, a change in accounting estimate, or a change in reporting entity. Listed below are three independent, un
> DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to the straight-line method beginning January 1, 2024. DRS also changed its estimated residual value used in computing depreciation for its office build
> Early one Wednesday afternoon, Ken and Larry studied in the dormitory room they shared at Fogelman College. Ken, an accounting major, was advising Larry, a management major, regarding a project for Larry’s Business Policy class. One asp
> Mayfair Department Stores operates over 30 retail stores in the Pacific Northwest. Prior to 2024, the company used the FIFO method to value its inventory. In 2024, Mayfair decided to switch to the dollar-value LIFO retail inventory method. One of your re
> Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2024. Webster continues to use the FIFO method for internal decision making purposes. Websterâ€
> Dinoland Manufacturing shipped consignment inventory of $200,000 to Storing Company on December 1, 2024. Storing agrees to sell the inventory for a 10% sales commission, while Dinoland maintains title and control over pricing. By the end of the year, $60
> You are assistant controller of Stamps & Company, a medium-sized manufacturer of machine parts. On October 22, 2023, the board of directors approved a stock option plan for key executives. On January 1, 2024, a specific number of stock options were grant
> While eating his Kellogg’s Frosted Flakes one February morning, Tony noticed the following notification on his iPhone: A quick click revealed reported earnings per share of $0.59 and $3.63 for the quarter and year ended January 2, 2021
> IGF Foods Company is a large, primarily domestic, consumer Foods Company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy’s The Almanac of Business and Industrial
> Del Conte Construction Company has experienced generally steady growth since its inception in 1976. Management is proud of its record of having maintained or increased its earnings per share in each year of its existence. The economic downturn has led to
> “I guess I’ll win that bet!” you announced to no one in particular. “What bet?” Renee asked. Renee Patsy was close enough to overhear you. “When I
> The shareholders’ equity of Proactive Solutions, Inc., included the following at December 31, 2024: Additional Information: • Proactive had 7 million shares of preferred stock authorized, of which 2 million were outst
> The 2021 annual report of Best Buy Co., Inc. reported profitable operations. However, the company has not always been profitable. The company suffered a net loss for the 12 months ended March 3, 2012: Note: The calculation of diluted (loss) per share for
> Microsoft provides compensation to executives in the form of a variety of incentive compensation plans, including restricted stock award grants. The following is an excerpt from a disclosure note from Microsoft’s 2020 annual report: Re
