What is the meaning of (a) 2/10, n/30; (b) n/90; (c) n/eom?
> The following is an excerpt from a conversation between two sales clerks, Tracy Rawlin and Jeff Weimer. Both Tracy and Jeff are employed by Magnum Electronics, a locally owned and operated electronics retail store. Tracy: Did you hear the news? Jeff: Wha
> Your sister operates Harbor Ready Parts Company, an online boat parts distributorship that is in its third year of operation. The income statement is shown below and was recently prepared for the year ended October 31, 20Y6. Your sister is considering
> James Nesbitt established Up-Date Computer Services on August 1, 20Y4. The effect of each transaction and the balances after each transaction for August are shown below in the integrated financial statement framework. Instructions: 1. Pre
> The following is an excerpt from a conversation between Eric Jackson and Carlie Miller. Eric is debating whether to buy a stereo system from First Audio, a locally owned electronics store, or Dynamic Sound Systems, an online electronics company. Eric: Ca
> The Laurel Co. is owned and operated by Paul Laurel. The following is an excerpt from a conversation between Paul Laurel and Maria Fuller, the chief accountant for Laurel Co. Paul: Maria, I’ve got a question about this recent balance sheet. Maria: Sure,
> On July 29, 20Y1, Ever Green Company, a garden retailer, purchased $12,000 of seed, terms 2/10, n/30, from Fleck Seed Co. Even though the discount period had expired, Mary Jasper subtracted the discount of $240 when she processed the documents for paymen
> The following data (in millions) were taken from http://finance.yahoo.com. 1. Match each of the following companies with the data for Company A, B, C, or D: Apple Inc. (AAPL) Facebook, Inc. (FB) International Business Machines Corporatio
> Cigna Corp. (CI) provides insurance services, and Deere & Company (DE) manufactures and sells farm and construction equipment. The following data (in millions) were adapted from recent financial statements of each company. 1. Compute
> Assume that you and two friends are debating whether to open an automotive and service retail chain that will be called Auto-Mart. Initially, Auto-Mart will open three stores locally, but the business plan anticipates going nationwide within five years. C
> Several years ago, your brother opened Ready Appliance Repairs. He made a small initial investment and added money from his personal bank account as needed. He withdrew money for living expenses at irregular intervals. As the business grew, he hired an a
> The following is an excerpt from a conversation between Monte Trask and Jamie Palk just before they boarded a flight to Berlin on American Airlines. They are going to Berlin to attend their company’s annual sales conference. Monte: Jamie, aren’t you takin
> Yahoo.com’s (YHOO) finance Internet site provides summary financial information about public companies, such as stock quotes, recent financial filings with the Securities and Exchange Commission, and recent news stories. Go to Yahoo.com’s financial Web site
> Amazon.com (AMZN), an Internet retailer, was incorporated in the early 1990s and opened its virtual doors on the Web shortly thereafter. On its statement of cash flows, would you expect Amazon.com’s net cash ï¬&#
> Les Stanley established an insurance agency on July 1, 20Y5, and completed the following transactions during July: a. Opened a business bank account in the name of Stanley Insurance Inc., with a deposit of $60,000 in exchange for common stock. b. Borrowe
> On August 1, 20Y7, Dr. Ruth Turner established SickCo, a medical practice organized as a professional corporation. The following conversation occurred the following February between Dr. Turner and a former medical school c lassmate, Dr. Shonna Rees, at a
> Enron Corporation, headquartered in Houston, Texas, provided products and services for natural gas, electricity, and communications to wholesale and retail customers. Enron’s operations were conducted through a variety of subsidiaries a
> Assume that you are considering developing a nationwide chain of women’s clothing stores. You have contacted a Seattle-based firm that specializes in financing new business ventures and enterprises. Such firms, called venture capital firms, finance new busine
> On January 9, 20--, Dr. Susan Tempkin established DocMed, a medical practice organized as a professional corporation. The below conversation took place the following September between Dr. Tempkin and a former medical school classmate, Dr. Phil Anzar, at
> Assume that you are the chief executive officer for a national poultry producer. The company’s operations include hatching chickens through the use of breeder stock and feeding, raising, and processing the mature chicks into finished products. The finished
> Loretta Smith, president and owner of Custom Enterprises, applied for a $250,000 loan from City National Bank. The bank requested financial statements from Custom Enterprises as a basis for granting the loan. Loretta has told her accountant to provide the
> The management of The Hershey Company (HSY) has asked union workers in two of its highest-cost Pennsylvania plants to accept higher health insurance premiums and take a wage cut. The workers’ portion of the insurance cost would double from 6% of the prem
> a. Why is it advantageous to have a high inventory turnover? b. Is it possible for the inventory turnover to be too high? Discuss. c. Is it possible to have a high inventory turnover and a high days’ sales in inventory? Discuss.
> A company that grants terms of n/30 on all sales has a yearly accounts receivable turnover, based on monthly averages, of 9. Is this a satisfactory turnover? Discuss.
> Why would the accounts receivable turnover ratio be different between Wal-Mart (WMT) and Procter & Gamble (PG)?
> Alpine Realty, Inc., organized July 1, 20Y8, is operated by Angela Griffin. How many errors can you find in the following financial statements for Alpine Realty, Inc., prepared after its first m
> For Belzer Corporation, the working capital at the end of the current year is $24,000 more than the working capital at the end of the preceding year, reported as follows: Has the current position improved? Explain. Preceding Year Current Year Curre
> How would you respond to a horizontal analysis that showed an expense increasing by over 70%?
> The current year’s amount of net income (after income tax) is 9% larger than that of the preceding year. Does this indicate an improved operating performance? Discuss.
> Why would the dividend yield differ significantly from the return on common stockholders’ equity?
> a. Why is the return on stockholders’ equity by a thriving business ordinarily higher than the return on total assets? b. Should the return on common stockholders’ equity normally be higher or lower than the return on total stockholders’ equity? Explain.
> a. How does the return on total assets differ from the return on stockholders’ equity? b. Which return is normally higher? Explain.
> What do the following data taken from a comparative balance sheet indicate about the company’s ability to borrow additional funds on a long-term basis in the current year as compared to the preceding year? Current Year Preceding Ye
> What is the difference between horizontal and vertical analysis of financial statements?
> Delta Air Lines (DAL)’ SkyMiles program allows frequent flyers to earn credit toward free tickets and other amenities. a. Does Delta Air Lines have a contingent liability for award redemption by its SkyMiles members? b. When should a contingent liability
> a. Does the recognition of depreciation in the accounts provide a special cash fund for the replacement of fixed assets? Explain. b. Describe the nature of depreciation as the term is used in accounting.
> Pendray Systems Corporation began operations on January 1, 20Y5 as an online retailer of computer software and hardware. The following financial statement data were taken from Pendray’s records at the end of its first year of operations, December 31, 20Y5.
> Are the amounts at which fixed assets are reported on the balance sheet their approximate market values as of the balance sheet date? Discuss.
> For some of the fixed assets of a business, the balance in Accumulated Depreciation is exactly equal to the cost of the asset. (a) Is it permissible to record additional depreciation on the assets if they are still useful to the company? Explain. (b) Whe
> a. Under what conditions is the use of an accelerated depreciation method most appropriate? b. Why is an accelerated depreciation method often used for income tax purposes? c. What is the Modified Accelerated Cost Recovery System (MACRS), and under what
> After the accounts are adjusted at the end of the fiscal year, Accounts Receivable has a balance of $475,000 and Allowance for Doubtful Accounts has a negative balance of $(46,800). Describe how Accounts Receivable and Allowance for Doubtful Accounts are
> How are manufacturing inventories different from those of a retailer?
> In an attempt to improve operating efficiency, one employee was made responsible for all purchasing, receiving, and storing of supplies. Is this organizational change wise from an internal control standpoint? Explain
> Why should the responsibility for a sequence of related operations be divided among different persons? Explain.
> Seatow Inc. has a petty cash fund of $2,500. (a) Since the petty cash fund is only $2,500, should Seatow Inc. implement controls over petty cash? (b) What controls, if any, could be used for the petty cash fund?
> (a) Why did Congress pass the Sarbanes Oxley Act? (b) What was the purpose of the Sarbanes Oxley Act?
> What are the major advantages and disadvantages of the single-step form of the income statement compared to the multiple-step form?
> The following cash data for the year ended December 31 were adapted from a recent annual report of Alphabet (GOOG), formerly known as Google. The cash balance as of January 1 was $18,347 (in millions). In millions Payments on debt ……………………………………
> Pacira Pharmaceuticals Inc. (PCRX) develops, produces, and sells products used in hospitals and surgery centers. The following data (in thousands) were adapted from recent financial statements. 1. Compute the monthly cash expenses for Years 1 and 2. Ro
> What is the nature of (a) a credit memorandum issued by the seller of merchandise and (b) a debit memorandum issued by the buyer of merchandise?
> Describe how the periodic method differs from the perpetual method of accounting for merchandise inventory.
> Is the Supplies balance before the accounts have been adjusted the amount that should normally be reported on the balance sheet? Explain.
> How are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting?
> Describe the nature of the assets that compose the following sections of a balance sheet: (a) current assets, (b) property, plant, and equipment.
> (a) Explain the purpose of the accounts Depreciation Expense and Accumulated Depreciation. (b) Is it customary for the balances of the two accounts to be equal? (c) In what financial statements, if any, will each account appear?
> Would AT&T and Microsoft use the cash basis or the accrual basis of accounting? Explain.
> Assume that Larsh Realty Inc. borrowed $75,000 from Country Bank and Trust. In recording the transaction, Larsh erroneously recorded the receipt as an increase in cash, $75,000, and an increase in fees earned, $75,000. (a) How would this error affect the
> Assume that Esquire Consulting erroneously recorded the payment of $30,000 of dividends as salary expense. (a) How would this error affect the equality of the accounting equation? (b) How would this error affect the income statement, statement of stockho
> The following financial data were adapted from a recent annual report of Target Corporation (TGT) for the year ending January 31. Accounts payable …………………………………………. $ 7,759 Cash ……………………………………………………………… 2,210 Common stock ……………………………………………………. 53 Cost of
> What particular item of financial or operating data appears on both the income statement and the statement of stockholders’ equity? What items appear on both the balance sheet and the statement of stockholders’ equity? What item appears on both the balan
> Using the January 1 and December 31, 20Y8, data given in Question 10, answer the following question: If Sylvester Consulting paid $18,000 of dividends during 20Y8, what was the amount of net income for 20Y8? Data from Question 10: Assume that as of Janu
> Briefly describe the nature of the information provided by each of the following financial statements: the income statement, the statement of stockholders’ equity, the balance sheet, and the statement of cash flows. In your descriptions, indicate whether
> For each of the following errors, indicate whether the error would cause the accounting equation to be out of balance and, if so, indicate how it would be out of balance. (a) The purchase of land for $85,000 cash was recorded as an increase in land of $8
> The three business activities are financing, investing, and operating. Using South west Airlines, give an example of each type of activity.
> A business’s stakeholders can be classified into capital market, product or service market, government, and internal stakeholders. Will the interests of all the stakeholders within a classification be the same? Use bankers and stockholders of the capital
> Provide an example of a transaction that affects (a) only one element of the accounting equation, (b) two elements of the accounting equation, (c) three elements of the accounting equation.
> Assume that a friend of yours operates a family-owned pharmacy. A super Wal-Mart, scheduled to open in the next several months, will also offer pharmacy services. What business emphasis would your friend use to compete with the Super Walmart pharmacy?
> Both KIA and BMW produce and sell automobiles. Describe and contrast the business emphasis of KIA and BMW.
> Why are most large companies like Apple, Pepsi, General Electric, and Intel organized as corporations?
> The financial statements at the end of Paradise Realty’s first month of operations are shown below. Instructions: 1. Would you classify a realty business such as Hamel Realty as a manufacturing, mercha
> What is the difference between a manufacturing business and a service business? Is a restaurant a manufacturing business, a service business, or both?
> What is the difference between a manufacturing business and a merchandising business? Give an example of each type of business.
> What are the basic elements of a financial accounting system? Do these elements apply to all businesses, from a local restaurant to Alphabet (Google) Inc.? Explain.
> The following data are taken from the financial statements of Outdoor Patio Inc. Terms of all sales are 2/10, n/60. a. For Years 2 and 3, determine (1) the accounts receivable turnover and (2) the days’ sales in recei
> The bond indenture for the 10-year, 8% debenture bonds dated January 2, 20Y8, required working capital of $200,000, a current ratio of 2.0, and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y9, the three
> PepsiCo, Inc. (PEP), the parent company of Frito-Layâ„¢ snack foods and Pepsi beverages, had the following current assets and current liabilities at the end of two recent years: a. Determine the (1) current ratio and (2) quick ratio f
> The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8: a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio.
> Income statement data for Yellowstone Images Inc. for the years ended December 31, 20Y5 and 20Y4, are as follows: a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for 20Y5 when compared with 20Y4. R
> Balance sheet data for a company for the years ended December 31, 20Y2 and 20Y1, are shown below. Prepare a comparative balance sheet for 20Y2 and 20Y1, stating each asset as a percent of total assets and each liability and stockholdersâ€
> Revenue and expense data for the current calendar year for Lyons Electronics Company and for the electronics industry are as follows. Lyons Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
> The amounts of the assets and liabilities of Glacier Travel Service as of September 30, 20Y6, the end of the current year, and its revenue and expenses for the year are listed below. The retained earnings were $150,000 and the common stock was $50,000 as
> Leadbetter Inc. reports the following for 20Y3: a. Prepare a partial income statement for Lead better Inc. beginning with income from continuing operations before income tax. b. Assuming 75,000 common shares and no preferred shares, calculate the earni
> The table below shows recent stock prices, earnings per share, and dividends per share for three companies. a. Determine the price-earnings ratio and dividend yield for the three companies. Round to one decimal place. b. Discuss the differences in thes
> The following information was taken from the financial statements of Monarch Resources Inc. for December 31 of the current year: The net income was $1,300,000, and the declared dividends on the common stock were $460,000 for the current
> The balance sheet for Shryer Industries Inc. at the end of 20Y9 indicated the following: Income before income tax was $3,400,000, and income taxes were $1,000,000 for the current year. Cash dividends paid on common stock during the current year total
> The following comparative income statement (in thousands of dollars) for two recent years was adapted from the annual report of Speedway Motorsports, Inc. (TRK), owner and operator of several major motor speedways, such as the Atlanta, Bristol, Charlotte
> The following data were taken from the financial statements of Woodwork Enterprises Inc. for the current fiscal year. Assuming that there are no intangible assets, determine the following: (a) debt ratio, (b) ratio of &ium
> Macy’s, Inc. (M), sells merchandise through company-owned retail stores and Internet website. Recent financial information for Macy’s is provided below (all numbers in millions). Assume the apparel in
> The following selected data were taken from the financial statements of The O’Malley Group Inc. for December 31, 20Y5, 20Y4, and 20Y3: No dividends on common stock were declared between 20Y3 and 20Y5. a. Determine the r
> Three major transportation segments and a major company within each segment are as follows: a. Determine the asset turnover for all three companies. Round to two decimal places. b. Interpret the differences in the asset turnover in terms of the operat
> Recent balance sheet information for two companies in the snack food industry, The Hershey Company (HSY) and Mondelez International, Inc. (MDLZ), is as follows (in millions of dollars): a. Determine the debt ratio for both companies. Round to one decim
> 1. Compare the asset turnover ratios for Delta Air Lines (see the chapter illustration), United (MBA 7-5), Southwest (MBA 7-6), and JetBlue (MBA 7-7). Use Year 2 of Delta and JetBlue for your comparison. 2. Comment on the results from part (1). Data fro
> Hasbro (HAS) and Mattel, Inc. (MAT), are the two largest toy companies in North America. Liability and stockholders’ equity data from recent balance sheets are shown for each company below (in millions): The income from operations and
> The following data were taken from the financial statements of Starr Construction Inc. for December 31, 20Y6 and 20Y5: The income before income tax was $2,816,000 and $2,640,000 for the years 20Y6 and 20Y5, respectively. a. Determine the
> Costco Wholesale Corporation (COST) and Wal-Mart Stores Inc. (WMT) compete against each other in general merchandise retailing, gas stations, pharmacies, and optical centers. Below is selected financial information for both companies from
> The following data were extracted from the income statement of Brecca Systems Inc.: a. Determine for each year (1) the inventory turnover and (2) the days’ sales in inventory. Round to nearest dollar and one decimal place. b. What c
> Bassett Stores Company and Fox Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two re
> Revenue and expense data for Searle Technologies Co. are as follows: a. Prepare an income statement in comparative form, stating each item for both 20Y8 and 20Y7 as a percent of sales. Round to one decimal place. b. Comment on the significant changes d
> CVS Caremark Corp. (CVS) 5.3% bonds due in 2043, sold for 113.04. Were the bonds selling at a premium or at a discount? Explain.
> ProTech Inc. provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year’s vacation pay is $432,000. Illustrate the effects on the accounts and financial statements of t
> According to a summary of the payroll of Kirby Co., $180,000 in earnings were subject to the 7.5% FICA tax. Also, $60,000 in earnings were subject to state and federal unemployment taxes. a. Calculate the employer’s payroll taxes, using the following rat
