This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Hiaport Company. Hiaport’s condensed and adapted balance sheet at December 31, 2011, follows. __________________________________(In millions) Total current assets .................................................................. $15.4 Properties, plant, equipment, and other assets.......................... 15.8 ………………………………………………………………..………………………. $31.2 Total current liabilities.............................................................. $ 9.4 Total long-term liabilities ............................................................ 5.5 Total shareholders’ equity .......................................................... 16.3 ……………………………………………………………………………………….. $31.2 Assume that during the fi rst quarter of the following year, 2012, Hiaport completed the following transactions: a. Paid half of the current liabilities. b. Borrowed $3.0 million on long-term debt. c. Earned revenue of $2.4 million, on account. d. Paid selling expense of $0.6 million. e. Accrued general expense of $0.3 million. Credit General Expense Payable, a current liability. f. Purchased equipment for $4.9 million, paying cash of $2.0 million and signing a long-term note payable for $2.9 million. g. Recorded depreciation expense of $0.9 million. Requirements 1. Compute Hiaport’s current ratio and debt ratio at December 31, 2011. Round to two decimal places. 2. Consider each transaction separately. Compute Hiaport’s current ratio and debt ratio after each transaction during 2012—that is, seven times. Round ratios to two decimal places. 3. Based on your analysis, you should be able to readily identify the effects of certain transactions on the current ratio and the debt ratio. Test your understanding by completing these statements with either “increase” or “decrease.” a. Revenues usually ___________ the current ratio. b. Revenues usually ____________ the debt ratio. c. Expenses usually _______________ the current ratio. (depreciation is an exception to this rule.) d. Expenses usually __________________ the debt ratio. e. If a company’s current ratio is greater than 1.0, as for Hiaport, paying off a current liability will always _________________the current ratio. f. Borrowing money on long-term debt will always ___________ the current ratio and _____________ the debt ratio.
> Healthy Hearts Consulting had the following selected transactions in December: Dec 1 Prepaid insurance for December through April, $3,500. 4 Purchased office furniture for cash, $900. 5 Performed services and received cash, $500. 8 Paid advertising expen
> Cherokee Corporation earned revenues of $37 million during 2012 and ended the year with net income of $7 million. During 2012, Cherokee collected cash of $20 million from customers and paid cash for all of its expenses plus an additional $5 million on ac
> This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Harrington Company. Harrington’s condensed and adapted balance sheet at December 31, 2012, follows. _________________________________(In millions) Total cur
> Refer back to Problem 3-71A. In Problem 3-71A The accounts of Mountain Lodge Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. Use the Mountain Lodge data in Problem 3-71A to prepare the company’s cl
> The accounts of Mountain Lodge Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Mountain Lodgeâ€&
> The adjusted trial balance of Simpson Corporation at March 31, 2012, follows. Requirements 1. Prepare Simpson Corporation’s 2012 income statement, statement of retained earnings, and balance sheet. List expenses (except for income tax
> Valley Apartments, Inc.’s unadjusted and adjusted trial balances at April 30, 2012, follow. Requirements 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Compute Valleyâ€
> Consider the unadjusted trial balance of Lady, Inc., at July 31, 2012, and the related month-end adjustment data. Adjustment data at July 31, 2012: a. Accrued service revenue at July 31, $1,700. b. Prepaid rent expired during the month. The unadjusted
> This exercise tests your understanding of the four inventory methods. List the name of the inventory method that best fits the description. Assume that the cost of inventory is rising. 1. ________ Generally associated with saving income taxes 2. ________
> Journalize the adjusting entry needed on December 31, end of the current accounting period, for each of the following independent cases affecting Green Corp. Include an explanation for each entry. a. Details of Prepaid Insurance are shown in the account:
> Masters Consulting had the following selected transactions in July: Jul 1 Prepaid insurance for July through November, $2,000. 4 Purchased office furniture for cash, $1,000. 5 Performed services and received cash, $800. 8 Paid advertising expense, $700.
> By the Bay Marine Supply reported the following comparative income statements for the years ended June 30, 2012, and 2011: By the Bay’s president and shareholders are thrilled by the company’s boost in sales and net
> Cova Corporation earned revenues of $40 million during 2013 and ended the year with net income of $6 million. During 2013, Cova collected $25 million from customers and paid cash for all of its expenses plus an additional $3 million for amounts payable a
> Salary Payable at the beginning of the month totals $20,000. During the month salaries of $122,000 were accrued as expense. If ending Salary Payable is $6,000, what amount of cash did the company pay for salaries during the month? a. $130,000 b. $142,000
> Muffin Mania, Inc., and La Crème Coffee Corporation are both specialty food chains. The two companies reported these figures, in millions: Requirements 1. Compute the gross profit percentage and the rate of inventory turnover for Muffin Man
> Great White Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Great White’s suppliers to lower the prices that Great White will pay wh
> The records of Lindbergh Aviation include the following accounts for inventory of aviation fuel at July 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round ave
> Army-Navy Surplus began March with 75 tents that cost $16 each. During the month, Army-Navy Surplus made the following purchases at cost: Mar 3 ………………… 95 tents @ $18 = $1,710 17 ………..…………… 165 tents @ $20 = 3,300 23 ………..…………….. 36 tents @ $21 = $ 756
> Assume a Gold Medal Sports outlet store began August 2012 with 44 pairs of running shoes that cost the store $33 each. The sale price of these shoes was $61. During August, the store completed these inventory transactions: Requirements 1. The preceding
> Tolbert Trumpet Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 30% from last year. Jim Tolbert, the president and principal stockholder, is distressed with
> Better Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Better Buy ends each January 31. Assume you are dealing with a single Better Buy store in San Diego, California. The San Diego store began 2012
> Bridget Krumb, Inc., purchased inventory costing $125,000 and sold 80% of the goods for $190,000. All purchases and sales were on account. Krumb later collected 25% of the accounts receivable. 1. Journalize these transactions for Krumb, which uses the pe
> Journalize the following assumed transactions for Th e Soda Pop Company. Show amounts in billions. a. Cash purchases of inventory, $4.5 billion b. Sales on account, $18.9 billion c. Cost of goods sold (perpetual inventory system), $3.9 billion d. Collect
> Putnam Company began April with inventory of $46,100. The business made net purchases of $31,500 and had net sales of $64,600 before a fire destroyed the company’s inventory. For the past several years, Putnam’s gross profit percentage has been 40%. Esti
> Matt Trozo formed a lawn service company as a summer job. To start the business on May 1, he deposited $2,500 in a new bank account in the name of Trozzo Lawn Service, Inc. consisting of a $1,500 loan from his father and $1,000 of his own money. The corp
> Refer to the consolidated financial statements of RadioShack Corporation in Appendix B. During 2010, the company had numerous accruals and deferrals. As a new member of RadioShack’s accounting staff , it is your job to explain the effects of accruals and
> Amazon.com, Inc. —like all other businesses—adjusts accounts prior to year end to get correct amounts for the financial statements. Examine Amazon.com, Inc.’s Consolidated Balance Sheets in Appendix A , and pay particular attention to “accrued expenses a
> The net income of Solas Photography Company decreased sharply during 2012. Lisa Almond, owner of the company, anticipates the need for a bank loan in 2013. Late in 2012, Almond instructed Brad Lail, the accountant and a personal friend of yours, to recor
> Cross Timbers Energy Co. is in its third year of operations, and the company has grown. To expand the business, Cross Timbers borrowed $15 million from Bank of Fort Worth. As a condition for making this loan, the bank required that Cross Timbers maintain
> The unadjusted trial balance of Good Times, Inc., at January 31, 2012, does not balance. The list of accounts and their balances is given below. The trial balance needs to be prepared and adjusted before the financial statements at January 31, 2012, can
> It is December 31, end of the year, and the controller of Cornell Corporation is applying the lower-of-cost-or-market (LCM) rule to inventories. Before any year-end adjustments, Cornell reports the following data: Cost of goods sold......................
> For each of the following situations, identify the inventory method that you would use; or, given the use of a particular method, state the strategy that you would follow to accomplish your goal: a. Inventory costs are increasing. Your company uses LIFO
> The accounting records of Columbia Furniture show these data (in millions). The shareholders are very happy with Columbia’s steady increase in net income. Auditors discovered that the ending inventory for 2010 was understated by $1 mi
> Eddie’s Convenience Stores’ income statement for the year ended December 31, 2011 and its balance sheet as of December 31, 2011 reported the following. The business is organized as a proprietorship, so it pays no corpo
> During 2012, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2013, Vanguard changes back to the FIFO method and the following year Vanguard switches back to LIFO again. Requirements 1. What would you think of
> Assume Young Company, a music store, lost some inventory in a fi re on March 15. To fi le an insurance claim, Young Company must estimate its March 15 inventory by the gross profit method. Assume that for the past two years, Young Company’s gross profit
> Cinnamon Roll, Inc., and Dunking Coffee Corporation are both specialty food chains. The two companies reported these figures, in millions: Requirements 1. Compute the gross profit percentage and the rate of inventory turnover for Cinnamon Roll, Inc., a
> Saltwater Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Saltwater’s suppliers to lower the prices that Saltwater will pay when it
> The records of Shepard Aviation include the following accounts for inventory of aviation fuel at October 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round av
> Camp Surplus began May with 67 tents that cost $25 each. During the month, Camp Surplus made the following purchases at cost: May 6 ………………… 101 tents @ $27 = $2,727 18 ……………………….. 163 tents @ $29 = 4,727 26 …………..…………….. 41 tents @ $30 = 1,230 Camp Surp
> Assume a Tilton Sports outlet store began January 2012 with 42 pairs of running shoes that cost the store $37 each. The sale price of these shoes was $63. During January, the store completed these inventory transactions: Requirements 1. The preceding d
> Fun Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Fun Buy ends each June 30. Assume you are dealing with a single Fun Buy store in Nashville, Tennessee. The Nashville store began 2012 with an inve
> The accounting records of J.L. Home Store show these data (in millions). The shareholders are very happy with J.L.’s steady increase in net income. Auditors discovered that the ending inventory for 2010 was understated by $4 million and
> Chester’s Convenience Stores’ income statement for the year ended December 31, 2011 and its balance sheet as of December 31, 2011 reported the following. The business is organized as a proprietorship, so it pays no c
> Assume Smith Company, a camera store, lost some inventory in a fire on August 15. To file an insurance claim, Smith Company must estimate its August 15 inventory by the gross profit method. Assume that for the past two years Smith Company’s gross profit
> Duracraft Corporation is nearing the end of its first year of operations. Duracraft made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000 of revenue. Expenses other than cost of goods sold a
> Express Detail, Inc. provides mobile car washing and detailing to its customers. The Income Statement for the month ended January 31, 2012, the Balance Sheet for December 31, 2011, and details of postings to the cash account in the general ledger for the
> The accounts of Gleneagles Company prior to the year-end adjustments follow. Adjusting data at the end of the year include the following: a. Unearned service revenue that has been earned, $1,650 b. Accrued service revenue, $32,200 c. Supplies used in o
> Valley Forge Corporation reported the following current accounts at December 31, 2011 (amounts in thousands): Cash................................................ $1,500 Receivables...................................... 5,900 Inventory...................
> Refer back to Problem 3-80B. In Problem 3-80B The accounts of Cool River Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. Prepare the company’s classified balance sheet in report form at March 31, 2
> The accounts of Cool River Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Cool River’s c
> The adjusted trial balance of Nicholl Corporation at May 31, 2012, follows: Requirements 1. Prepare Nicholl’s 2012 income statement, statement of retained earnings, and balance sheet. List expenses (except for income tax) in decreasin
> Crossway Apartments, Inc.’s unadjusted and adjusted trial balances at April 30, 2012, follow: Requirements 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Compute Crosswayâ€
> Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data. Adjustment data at August 31, 2012, include the following: a. Accrued advertising revenue at August 31, $2,100. b. Prepaid rent expi
> Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following independent cases affecting Woods Corp. Include an explanation for each entry. a. Details of Prepaid Insurance are shown in the acco
> Tulsa, Inc., reported the following data: Tulsa’s gross profit percentage is a. 54.0. b. 50.7. c. 53.0. d. 46.0. Freight in.. Purchases . $ 21,000 Sales returns. Purchase returns... $ 4,000 6,000 ........ 202,000 Beginning invento
> MusicMagic.net specializes in sound equipment. Because each inventory item is expensive, MusicMagic uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicM
> What are the three alternative work arrangements of flextime, job sharing, and telecommuting? What are the advantages and disadvantages of each?
> What are the consequences of stress?
> How do individual differences and organizational constraints influence decision making?
> How do the predications of self-determination theory apply to intrinsic and extrinsic rewards?
> What are the early theories of motivation? How applicable are they today?
> What are the three key elements of motivation?
> What are some contemporary theories of motivation, and how do they compare to one another?
> What is the link between perception and decision making? How does one affect the other?
> What is the role of dependence in power relationships?
> What are the possible sources of stress?
> What shortcuts do people frequently use in making judgments about others?
> What is attribution theory? What are the three determinants of attribution? What are the implications of attribution theory for explaining organizational behavior?
> What is perception, and what factors influence our perception?
> Samantha Parks is the owner and CEO of Sparks, a small New York agency that develops advertising, promotions, and marketing materials for high-fashion firms. Parks has tended to keep a tight rein on her business, overseeing most projects from start to fi
> What are the three ethical decision criteria, and how do they differ?
> What are the three major ways that jobs can be redesigned? In your view, in what situations would one of the methods be favored over the others?
> What is the job characteristics model? How does it motivate employees?
> What is variable pay? What are the variable-pay programs that are used to motivate employees? What are their advantages and disadvantages?
> What are employee involvement programs? How might they increase employee motivation?
> What are the key tenets of expectancy theory?
> How is organizational justice a refinement of expectancy theory?
> What are the key principles of goal-setting theory, self-efficacy theory, and reinforcement theory?
> What are the implications of employee job engagement for management?
> Few topics in the business press grab headlines and ignite the public than the compensation packages received by top management, which continue to rise. For companies in the United States with more than $5 billion in revenue, the median CEO compensation
> What are some of the common decision biases or errors that people make?
> What is the rational model of decision making? How is it different from bounded rationality and intuition?
> How do the Big Five traits predict behavior at work?
> What is the Myers-Briggs Type Indicator (MBTI), and what does it measure?
> What is personality? How do we typically measure it? What factors determine personality?
> You are probably so used to seeing Starbucks coffee shops everywhere that you might not realize the company went from just 11 stores in 1987 to 2,600 in the year 2000. This incredibly rapid growth sprang from the company’s ability to create a unique expe
> Do values differ across generations? How so?
> What is the difference between terminal and instrumental values?
> What is the difference between trait and behavioral theories? Are those theories valid?
> How does the situation or environment affect the degree to which personality predicts behavior?
> Those who have been in the workforce for many years often lament the “job hopping” that occurs with those who are more recent entrants into the workforce. Younger individuals tend to see such an attitude as old-fashioned, and may resent the implication t
> Agreeable people tend to be kinder and more accommodating in social situations, which you might think could add to their success in life. However, one downside of agreeableness is potentially lower earnings. Recent research has shown the answer to this a
> Are emotions rational? What functions do they serve?
> What is the difference between emotions and moods? What are the basic motions and moods?
> How do you apply concepts about emotions and moods to specific OB issues?
> What are some strategies for emotion regulation and their likely effects?
> What is the evidence for and against the existence of emotional intelligence?
> What factors create and sustain an organization’s culture?
> What is affective events theory? What are its applications?
