Questions and Answers of Financial Accounting For MBA

On December 29, 2006, AT\&T acquired Bell South. Prior to the acquisition, AT\&T and Bell South jointly owned AT\&T Mobility (formerly known as Cingular Wireless) and each accounted for
Rayburn Company purchased all of Kanodia Company's common stock for cash on January 1, at which time the separate balance sheets of the two corporations appeared as follows:During purchase
On January 1 of the current year, Engel Company purchases $100 \%$ of Ball Company for $\$ 16.8$ million. At the time of acquisition, the fair value of Ball's tangible net assets (excluding
Adube Systems, Inc., reports the following footnote to its $10-\mathrm{K}$ report.a. Of the total assets acquired, what portion is allocated to tangible assets and what portion to intangible
Easton Company acquires 100 percent of the outstanding voting shares of Harris Company. To obtain these shares, Easton pays $\$ 210,000$ in cash and issues 5,000 of its $\$ 10$ par value common
Hewlett-Packard reports the following schedule of comprehensive income (net income plus other comprehensive income) in its $200710-\mathrm{K}$ report ( $\$$ millions):a. Describe how firms like
Following is a portion of the investments footnote from MetLife's $200710-\mathrm{K}$ report. Investment earnings are a crucial component of the financial performance of insurance companies such as
General Mills invests in a number of joint ventures to manufacture and distribute its food products as discussed in the following footnote to its fiscal year 2007 10-K report:Investments in Joint
Caterpillar Inc. consists of two business units: the manufacturing company (parent corporation) and a wholly-owned finance subsidiary. These two units are consolidated in Caterpillar's
Effective corporate governance policies are a crucial component of contemporary corporate management.\section*{Required}What provisions do you believe should be incorporated into such a policy? How
Bartov Corporation agreed to build a warehouse for a client at an agreed contract price of $\$ 2,500,000$ Expected (and actual) costs for the warehouse follow: 2007, \$400,000; 2008, \$1,000,000;
Refer to the information for Bartov Corporation in M5-11.a. Use the financial statement effects template to record contract revenues and expenses for each year 2007 through 2009 using the
The ( AP offers an unconditional return policy. It normally expects $2 \%$ of sales at retail selling prices to be returned before the return period expires. Assuming that The GAP records total
Abbott I aboratories reports the following (summary) income statement.a. Compute the percent of net sales that Abbott Laboratories spends on research and development (R&D). Compare this level of
Bristol-Myers Squibb ( $1 \mathrm{MY}$ ) reports the following table in its $10-\mathrm{K}$ report relating to the year-overyear change in sales.a. Did sales increase or decrease in 2006 and
Cisco Systems reports the following footnote disclosure to its $10-\mathrm{K}$ report ( $\$$ millions).a. What amount of income tax expense does Cisco report in its income statement for 2008?b.
(jondyear Tire and Rubber ('ompany reports the following basic and diluted earnings per share information in its 2007 10-K report. (a) Describe the accounting definitions for basic and diluted
Target Corporation sells gift cards that can be used at any of the company's Target or Greatland stores. Target encodes information on the card's magnetic strip about the card's value, the date it
Explain when each of the following businesses should recognize revenue and identify any income measurement issues that could arise.a. RealMoney.Com, a division of TheStreet.Com, provides investment
Assume that General Electric Company agreed in May 2008 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of $\$ 500$ million is to be paid
On March 15, 2007, Frankel Construction contracted to build a shopping center at a contract price of $\$ 120$ million. The schedule of expected (which equals actual) cash collections and contract
The income tax footnote to the financial statements of FedEx Corporation follows.The components of the provision for income taxes for the years ended May 31 were as follows:a. What is the amount of
Following is the Bristol-Myers Squibb income statement. Identify the components that we would consider operating. (Dollars in millions) Net sales.... Cost of products sold.. 2007 $19,348 6,218
Following is the $\mathbb{D}$ eere \& Company income statement for 2007.a. Identify the components in its income statement that you would consider operating.b. Discuss your treatment of the
Colgate-Palmolive reports the following income tax footnote disclosure in its $10-\mathrm{K}$ report.a. Colgate reports $\$ 226.8$ million of deferred tax liabilities in 2007 relating to
Advanced Micro Devices ( AMD) and Intel (INTC) are competitors in the computer processor industry Following is a table ( $\$$ millions) of sales and R\&D expenses for both companies.a. What
Kellogg Co. reports the following table and discussion in its $200710-\mathrm{K}$The following tables provide an analysis of net sales and operating profit performance for 2007 versus
Footnotes to the 2007 annual report of Barnes \& Noble disclose the following:The Barnes \& Noble Member program entitles the Member to receive a $10 \%$ discount on all purchases made ( $20 \%$
Amazon.com, Inc., provides the following explanation of its revenue recognition policies in its $10-\mathrm{K}$ report.We offer Earth's Biggest Selection and seek to be Earth's most
The 2007 income statement for Ptizer is reproduced in this module. Pfizer also reports the following footnote relating to its income taxes in its $200710-\mathrm{K}$ report.Deferred Taxes Deferred
The income statement for Xerox Corporation follows\section*{Required}a. Xerox reports three main sources of income: sales, service, and finance income. How should revenue be recognized for each of
FedlEx reports the following footnote for income taxes in its $200710-\mathrm{K}$ report.The significant components of deferred tax assets and liabilities as of May 31 were as
IFminmi, Inc. IC.II $>$, reports total tax expense of $\$ 5,065$ (in thousands) on its income statement for year ended March 30, 2008. The tax footnote in the company's $10-\mathrm{K}$
Kraft Foods, Inc., reports the following footnote disclosure in its $200710-\mathrm{K}$ relating to its restructuring programs.\section*{Asset Impairment, Exit and Implementation
Consider the following income tax footnote information for the E. I. du Pont de Nemours and Company.\section*{Required}a. What is the total amount of income tax expense that DuPont reports in its
Following are the income statement and relevant footnotes from the $10-\mathrm{K}$ of Intuil, Inc.\section*{Required}a. Describe the differences in revenue recognition between produce sales and
The following disclosures are from the August 31, 2008, annual report of Costco Wholesale Corporation.Revenue Recognition Membership fee revenue represents annual membership fees paid by
Apple, Inc., sells its iPhones through an exclusive arrangement with AT \&T that requires a two-year contract upon purchase of the iPhone. Analysts estimate that AT \& T is paying Apple over
Describe the concept of asset turnover. What does the concept mean and why it is so important to understanding and interpreting financial performance?
${ }^{A}$ Define (1) net nonoperating obligations and (2) the net nonoperating expense percent.
\\ Following is the balance sheet for Target Corporation. Identify and compute fiscal year-end 2008 net \\ operating assets.} ($ millions) Assets Cash and cash equivalents Accounts receivable, net
Following is the income statement for Target Corporation. (a) Compute Target's NOPBT - net operating profit before tax. (Hint: Treat Target's credit card revenues and related expenses as
Selected balance sheet and income statement information for Target Corporation, a department store retailer, follows.a. Compute its 2008 return on net operating assets (RNOA).b. Disaggregate RNOA
Following is the balance sheet for FedEx. Identify and compute its 2008 net operating assets (NOA). FEDEX CORPORATION May 31 ($ millions, except per share amount) Assets 2008 2007 Cash and cash
Following is the income statement for Fed Ex. Compute its 2008 net operating profit after tax (NOPAT) assuming a $37.1 \%$ total statutory tax rate and that "Other, net" reported under other income
Selected balance sheet and income statement information for FedEx, a service company, follows.a. Compute FedEx's 2008 return on net operating assets (RNOA).b. Disaggregate RNOA into net operating
Selected balance sheet and income statement information from Abercrombie \& Fitch and TJX Companies, clothing retailers in the high-end and value-priced segments, respectively, follows.a. Compute
Selected balance sheet and income statement information from Verizon follows.a. Compute the current ratio for each year and discuss any trend in liquidity. What additional information about the
Selected income statement information is presented below for Proctor \& Gamble and Abercrombie \& Fitch.a. Compute the tax shield for each company: Net nonoperating expense (revenue)
Refer to the 2007 fiscal year financial data of 3M Company from P4-36 to answer the following requirements.a. Compute the DuPont Model component measures for profit margin, asset turnover, and
Selected balance sheet and income statement information for department store retailers Target Corporation and Wal-Mart Stores follows.a. Compute the 2008 return on net operating assets (RNOA) for
Selected balance sheet and income statement information for the clothing retailers, Abercrombie $\&$ Fitch and The (GAP, Inc., follows.a. Compute the 2008 return on net operating assets (RNOA)
Selected balance sheet and income statement information for the drug retailers CVS Corporation and Walgreen Company follows.a. Compute the 2007 return on net operating assets (RNOA) for each
Selected fiscal year balance sheet and income statement information for the computer chip maker, Intel, Intel (INTC) follows ( $\$$ millions)a. Compute the 2007 return on equity (ROE) and the 2007
Selected balance sheet and income statement information from Macy"s follows (\$ millions). Macy's (M)a. Compute the 2008 return on equity (ROE) and 2008 return on net operating assets (RNOA)b.
Selected balance sheet and income statement information from Comcast Corporation for 2005 through 2007 follows ( $\$$ millions).a. Compute the 2008 return on equity (ROE) and 2008 return on net
Selected balance sheet and income statement information from Comcast Corporation for 2005 through 2007 follows ( $\$$ millions).a. Compute the current ratio for each year and discuss any trend in
Selected balance sheet and income statement information from Verizon Communications, Inc., for 2005 through 2007 follows ( $\$$ millions).a. Compute the current ratio for each year and discuss any
Refer to the income statement and balance sheet of Kellogg Company, from Mid-Module Reviews 1 Kellogg Company (K) and 2 .a. Compute the FLEV and SPREAD for Kellogg's for 2007.b. Use RNOA from
The income statement for The TJX Companies, Inc., follows. THE TJX COMPANIES, INC. Consolidated Statements of Income January 26, January 27, January 28, Fiscal Year Ended ($ thousands) 2008 2007 2006
Balance sheets and income statements for $3 \mathrm{M}$ Company follow.\section*{Required}a. Compute net operating profit after tax (NOPAT) for 2007 and 2006. Assume that combined federal and state
Refer to the financial information of $3 \mathrm{M}$ Company in P4-36 to answer the following requirements.\section*{Required}a. Computè the current ratio and quick ratio for 2007 and 2006.
Refer to the financial information of 3.M Company in P4-36 to answer the following requirements.\section*{Required}b. Assume that its return on equity (ROE) for 2007 is $37.74 \%$ and its retum on
Balance sheets and income statements for Target Corporation follow.\footnotetext{Requireda. Compute net operating profit after tax (NOPAT) for 2008 and 2007. Assume that the combined federal and
Refer to the financial information of Target Corporation (T(TT) in P4-39 to answer the following requirements.\section*{Required}a. Compute Target's current ratio and quick ratio for 2008 and 2007.
Refer to the financial information of Target Corporation (T(TT) in P4-39 to answer the following requirements.\section*{Required}a. Compute Target's financial leverage (FLEV) and Spread for 2008;
Balance sheets and income statements for Intel Corporation follow. Refer to these financial statements to answer the requirements.\section*{Required}a. Compute net operating profit after tax (NOPAT)
Balance sheets and income statements for fothemp : Infmsm follow. Refer to these financial statements to answer the requirements.\section*{Required}a. Compute net operating profit after tax (NOPAT)
Balance sheets and income statements for Amgen, Inc. follow. Refer to these financial statements to answer the following requirements.\section*{Required}a. Compute net operating profit after tax
Refer to the financial information of Amgen, Inc. in P4-44 to answer the following requirements.\section*{Required}a. Compute current ratio and quick ratio for 2007 and 2006. Comment on any observed
Refer to the financial information of Amgen, Inc. in P4-44 to answer the following requirements.\section*{Required}a. Assume that 2007 net nonoperating expenses (NNE) are $\$ 12$ million and that
Net operating profit margin (NOPM) and net operating asset turnover (NOAT) for several selected companies for 2007 follow.a. Graph NOPM and NOAT for each of these companies. Do you see a pattern that
Refer to the fiscal 2008 financial data of Target Corporation in P4-39 to answer the following requirements.\section*{Required}a. Apply the basic DuPont Model and compute the component measures for
Refer to the fiscal 2008 financial data of Intel Corporation in P4-42 to answer the following requirements.\section*{Required}a. Apply the basic DuPont Model and compute its component measures for
One way to increase overall profitability is to increase gross profit. This can be accomplished by raising prices and/or by reducing manufacturing costs.Requireda. Will raising prices and/or reducing
Increasing net operating asset turnover requires some combination of increasing sales and/or decreasing net operating assets. For the latter, many companies consider ways to reduce their investment
Companies are aware that analysts focus on profitability in evaluating financial performance. Managers have historically utilized a number of methods to improve reported profitability that are
For each of the following separate situations, prepare the necessary accounting adjustments using thea. Unrecorded depreciation on equipment is $\$ 610$.b. The Supplies account has an unadjusted
Refer to the information in E3-26. Prepare journal entries for each accounting adjustment.
Engel Company closes its accounts on December 31 each year. The company works a five-day work week and pays its employees every two weeks. On December 31,2008 , Engel accrued $\$ 4,700$ of salaries
Selected T-account balances for Bloomfield Company are shown below as of January 31, 2010 accounting adjustments have already been posted. The firm uses a calendar-year accounting period but prepares
T. Lys began Thomas Refinishing Service on July 1, 2009. Selected accounts are shown below as of July 31, before any accounting adjustments have been made.Using the following information, prepare the
Refer to the information in E3-31. Prepare adjusting journal entries for each transaction. Set up T-accounts for each of the ledger accounts and post the journal entries to them.
Refer to the information in E3-31. Prepare adjusting journal entries for each transaction. Set up T-accounts for each of the ledger accounts and post the journal entries to them.a. Harley-Davidson
Refer to the information in E3-33. Prepare journal entries for each transaction.
The adjusted trial balance of The (IAP. Inc., dated February 2, 2008, contains the following selected accounts,Prepare entries to close these accounts in journal entry form. Set up T-accounts for
Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 488 locations across the U.S. as well as in Canada,
Refer to the information in E3-36. Prepare journal entries for transactions in parts a through $d$.
Refer to the information in E3-36. Prepare journal entries for transactions in parts a through $d$.a. Prepare Beneish Corporation's income statement and statement of stockholders' equity for
The following information relates to December 31 accounting adjustments for Koonce Kwik Print Company. The firm's fiscal year ends on December 31.1. Weekly salaries for a five-day week total \(\$
Refer to the information in P3-39. Prepare adjustments required at December 31 using journal entries.
The following selected accounts appear in Sloan Company's unadjusted trial balance at December 31 , 2010 , the end of its fiscal year (all accounts have normal balances).\section*{Required}a. Prepare
Refer to the information in P3-41. Prepare journal entries for parts $a$ and $b$.
D. Roulstone opened Roulstone Roofing Service on April 1, 2010. Transactions for April follow\section*{Required}a. Set up T-accounts for the following accounts: Cash; Accounts Receivable: Supplies;
Refer to the information in P3-43.}\section*{Required}a. Use the financial statement effects template to record the transactions for April.b. Use the financial statement effects template to record
Pownall Photomake Company, a commercial photography studio, completed its first year of operations on December 31, 2010. General ledger account balances before year-end adjustments follow; no
Refer to the information in P3-45.\section*{Required}a. Prepare journal entries to record the accounting adjustments.b. Set up T-accounts for each account and post the journal entries to them.
BensEx, a mailing service, has just completed its first year of operations on December 31, 2010. Its general ledger account balances before year-end adjustments follow; no adjusting entries have been
Refer to information in P3-47.\section*{Required}a. Prepare journal entries to record the accounting adjustments.b. Set up T-accounts for each account and post the journal entries to them.
Wysocki Wheels began operations on March 1, 2010, to provide automotive wheel alignment and balancing services. On March 31, 2010, the unadjusted trial balance follows.The following information is

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