Questions and Answers of Financial Accounting Tool

The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C.Instructions(c) Totals $30,420(g) Net income
Marriott Corporation split into two companies: Host Marriott Corporation and AN Marriott International. Host Marriott retained ownership of the corporation’s vast hotel and other properties, while
Purpose: Use the stockholders’ equity section of an annual report and identify the major components.Address: www.annualreports.com Steps _A. Select a particular company.2. Search by company name.3.
During a recent period, Analysis the fast-food chain Wendy's International purchased y many treasury shares. This caused the number of shares outstanding to fall from 124 million to 105 million. The
Which item in not considered part of reserves?(a) Unrealized loss on available-for-sale investments. (c) Retained earnings.(b) Revaluation surplus. (d) Issued shares.
Overton Co. had the following transactions during the current period.Mar. 2 _ Issued 5,000 shares of $1 par value ordinary shares to attorneys in payment of a bill for $30,000 for services performed
The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements,
Why is it necessary to convert accrual-basis net income to cash-basis net income when preparing a statement of cash flows?
Why and how is depreciation expense reported in a statement of cash flows prepared using the indirect method?
During 2017, Slivowitz Company exchanged $\$ 1,700,000$ of its common stock for land. Indicate how the transaction would be reported on a statement of cash flows, if at all.
(a) What are the phases of the corporate life cycle?(b) What effect does each phase have on the amounts reported in a statement of cash flows?
Which of the following will not be reported in the statement of cash flows?(a) The net change in stockholders' equity during the year.(b) Cash payments for plant assets during the year.(c) Cash
Which of the following is incorrect about the statement of cash flows?(a) The direct method may be used to report net cash provided by operating activities.(b) The statement shows the net cash
Net income is $\$ 132,000$, accounts payable increased $\$ 10,000$ during the year, inventory decreased $\$ 6,000$ during the year, and accounts receivable increased $\$ 12,000$ during the
Items that are added back to net income in determining net cash provided by operating activities under the indirect method do not include:(a) depreciation expense.(b) an increase in inventory. (c)
The following data are available for Bill Mack ( 1.0 2) Corporation Net income$\$ 200,000$Depreciation expense $\quad 40,000$Dividends paid 60,000 Gain on sale of land 10,000 Decrease in accounts
The following data are available for Retique!Increase in accounts payable $\$ 40,000$Increase in bonds payable 100,000 Sale of investment 50,000 Issuance of common stock $\quad 60,000$Payment of
Oraring the introductory phase of a com-pany's life cycle, one would normally expect to see:(a) negative cash from operations, negative cash from investing, and positive cash from financing(b)
Which of the following items is reported on a statement of cash flows prepared by the direct method?(a) Loss on disposal of building(b) Increase in accounts receivable.(c) Depreciation expense.(d)
Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash
Classify each item as an operating, investing, or financing activity. Assume all items involve cash unless there is information to the contrary.(a) Purchase of equipment.(d) Cash received from sale
(a) Why is net cash provided by operating activities likely to be lower than reported net income during the growth phase?(b) Why is net cash from investing activities often positive during the late
Suppose Columbia Sportswear Company had accounts receivable of $299,585,000 at January 1, 2017, and $226,548,000 at December 31, 2017. Assume sales revenue was$1,244,023,000 for the year 2017. What
Moss Corporation had the following transactions.Issued $160,000 of bonds payable.Paid utilities expense.Issued 500 shares of preferred stock for $45,000.Sold land and a building for $250,000.reWst
PK Photography reported net income of $100,000 for 2017. Included in the income statement were depreciation expense of $6,300, patent amortization expense of$4,000, and a gain on disposal of plant
The financial statements for Tootsie Roll Industries are presented in Appendix A at the end of this book.Instructions Answer these questions using the Consolidated Income Statement:(a) What was the
The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.Instructions a (a) Based on the information contained in these
The May 1998 issue of the Journal of Accountancy includes an article by Randall W. Luecke and David T. Meeting entitled “How Companies Report Income.”Instructions Read the article and answer the
Bob Evans Farms, Inc., operates 315 restaurants in 19 states and produces fresh and fully cooked sausage products, fresh salads, and related products distributed to grocery stores in the Midwest,
In August 1999 it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in The Wall Street Journal blared, “French Retailers Create New Wal-Mart
Purpose: No financial decision maker should ever rely solely on the finan- cial information reported in the annual report to make decisions. It is important to keep abreast of financial news. This
Three years ago Kathy Webb and her brother-in-law John Utley opened FedCo Department Store. For the first 2 years, business was good, but the following condensed income results for 2001 were
The following situation is presented in chronological order:. Dexter decides to buy a surfboard.. He calls Surfing USA Co. to inquire about their surfboards.Two days later he requests Surfing USA Co.
Explain the recording of purchases and sales of inventory under a periodic inventory system.
Explain how to determine cost of goods sold under a periodic inventory system.
Describe the steps in determining inventory quantities.
Identify the unique features of the income statement for a merchandising company under a periodic inventory system.
Explain the basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system.
Explain the financial statement and tax effects of each of the inventory cost flow assumptions.
Explain the lower of cost or market basis of accounting for. inventories.
Compute and interpret the inventory turnover ratio.
Describe the LIFO reserve and explain its importance for comparing results of different companies.
At December 31, 1998, the following information (in thousands) was available for sunglasses manufacturer Oakley, Inc.: ending inventory $35,548; beginning inventory$26,200; cost of goods sold
Winnebago Industries, Inc. is a leading manufacturer of motor homes.Winnebago reported ending inventory at December 31, 1998, of $55,433,000 under the LIFO inventory method. In the notes to its
Spain Department Store uses a perpetual inventory system. Data for product E2-D2 include the following purchases:On June 1 Spain sold 30 units, and on August 27, 33 more units. Compute the cost of
Creole Company reports net income of $90,000 in 2001. However, ending inventory was understated by $7,000. What is the correct net income for 2001? What effect, if any, will this error have on total
The trial balance of G. Garbo Company at the end of its fiscal year, August 31, 2001, includes these accounts: Merchandise Inventory $17,200; Purchases $142,400; Sales$190,000; Freight-in $4,000;
Presented here is information related to Baja Co. for the month of January 2001:Beginning merchandise inventory was $42,000, and ending inventory was $63,000.Instructions Prepare an income statement
Powder! sells a snowboard, Xpert, that is popular with snowboard enthusiasts.Below is information relating to Powder!’s purchases of Xpert snowboards during SepProve the amount allocated to cost of
In June, Dakota Company reports the following for the month of June:Instructions (a) Compute cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average cost.(b)
This information is available for PepsiCo, Inc. for 1996, 1997, and 1998:Instructions Calculate the inventory turnover ratio, days in inventory, and gross profit rate (from Chapter 5) for PepsiCo.,
Deere & Company is a global manufacturer and distributor of agricultural, con- Determine the effect of the struction, and forestry equipment. It reported the following information in its 1998 an-
Information about Powder! is presented in E6-6. Additional data regarding Pow- Apply cost flow methods to der!’s sales of Xpert snowboards are provided below. Assume that Powder! uses a per-
Seles Hardware reported cost of goods sold as follows:Seles made two errors:1. 2001 ending inventory was overstated by $4,000.2. 2002 ending inventory was understated by $3,000.Instructions e Compute
Aruba Company reported these income statement data for a 2-year period:Aruba Company uses a periodic inventory system. The inventories at January 1, 2001, and December 31, 2002, are correct. However,
At the beginning of the current season on April 1, the ledger of Murdoch’s Pro trial balance and partial in- Shop showed Cash $2,500; Merchandise Inventory $3,500; and Common Stock $6,000.eae
Parking Lot City Department Store is located in midtown Metropolis. At the end Prepare a multiple-step of the company’s fiscal year on November 30, 2001, the following accounts appeared in ‘come
Apocalypse Distribution markets CDs of the performing artist Harrilyn Hann- Determine cost of goods sold son. At the beginning of March, Apocalypse had in beginning inventory 1,500 Hannson and ending
The management of Zucchini Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2001 the accounting records show these data:Units purchased
This information is available for the Automotive and Electronics Divisions of General Motors Corporation for 1998. General Motors uses the LIFO inventory method.Instructions Calculate the inventory
Save-Mart Center began operations on July 1. It uses a perpetual inventory system. During July the company had the following purchases and sales:Instructions (a) Determine the ending inventory under
At the beginning of the current season, the ledger of Kicked-Back Tennis Shop Journalize, post, and prepare showed Cash $2,500; Merchandise Inventory $1,700; and Common Stock $4,200. These trial
High-Point Department Store is located near the Village Shopping Mall. At the Prepare a multiple-step end of the company’s fiscal year on December 31, 2001, these accounts appeared in its income
Heartland Distribution markets CDs of the performing artist Brooks Straight. At the beginning of October, Heartland had in beginning inventory 1,000 Straight CDs with a unit cost of $5. During
The management of Real Novelty Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average cost. The company requests your help in determining the
Ag-Chem Equipment Co. Inc., headquartered in Minnetonka, Minnesota, manufactures a full line of equipment that is used to apply fertilizer. Many of these systems are computer controlled. This
The notes that accompany a company’s financial statements provide informative details that would clutter the amounts and descriptions presented in the statements.Refer to the financial statements
The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.Instructions .(a) Based on the information in the financial
The March 5, 1999, issue of aes Week contains, an Bradle by Doug Bartholomew entitled “What's oad pine Apple's Recovery.”Instructions Read the article and answer the following inventory-related
Snowboarding is a rapidly growing sport in the United Stnies, In 1995 Morrow Snowboards announced it would sell shares of stock to the public. In its prospectus (an information-filled document that
Nike and Reebok compete head-to-head in the sport shoe and sport apparel business. For both companies, inventory is a significant portion of total assets. The following information was taken from
Fuji Photo Film Company isa Japanese manufacturer of photographic products. Its U.S. counterpart, and arch rival, is Eastman Kodak. Together the two dominate the global market for film. The following
Purpose: Use a company’s annual report to identify the inventory method used and analyze the effects on the income statement and balance sheet.Address: http://www.cisco.com (or go to
Morton International, Inc., headquartered in Chicago, Illinois, manufactures specialty chemicals, automobile airbags, and salt. Recently, its specialty chemicals business was reorganized, and three
You are the controller of Small Toys Inc. Joy Small, the president, recently mentioned to you that she found an error in the 2000 financial statements which she believes has corrected itself. She
Tony Galego, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Galego’s law firm prepares monthly financial statements, when should it recognize
On January 9 a company pays $5,000 for salaries, of which $1,700 was reported as Salaries Payable on December
Give the entry to record the payment.
Transactions that affect earnings do not necessarily affect cash.Identify the effect, if any, that each of the following transactions would have upon cash and retained earnings. The first transaction
Riko Company accumulates the following adjustment data at December 31. Indicate (1) the type of adjustment (prepaid expense, accrued revenues, and so on) and(2) the status of the accounts before
On July 1, 2001, Bere Co. pays $15,000 to Marla Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Bere Co.journalize and post the entry on July 1
The bookkeeper for DeVoe Company asks you to prepare the following accrued adjusting entries at December 31:(a) Interest on notes payable of $400 is accrued.(b) Service revenue earned but unbilled
The trial balance of Hoi Company includes the following balance sheet accounts.Identify the accounts that might require adjustment. For each account that requires adjustment, indicate (1) the type of
The adjusted trial balance of Lumas Corporation at December 31, 2001, includes the following accounts: Retained Earnings $15,600; Dividends $6,000; Service Revenue $35,400; Salaries Expense $13,000;
The following selected accounts appear in the adjusted trial balance for Khanna Company. Indicate the financial statement on which each balance would be reported.(a) Accumulated Depreciation. (e)
These are the assumptions, principles, and constraints discussed in this and previous chapters:1. Economic entity assumption.. Matching principle.. Monetary unit assumption.. Time period assumption..
Here are some accounting reporting situations:(a) Tercek Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be
In its first year of operations, Brisson Company earned $26,000 in services revenue, $4,000 of which was on account and still outstanding at year-end. The remaining Determine cash basis and$22,000
Rafael Company accumulates the following adjustment data at December 31: an(a) Service Revenue earned but unbilled totals $600. Identify types of adjustments(b) Store supplies of $300 are on hand.
The ledger of Convenient Rental Agency on March 31 of the current year includes Prepare adjusting entries these selected accounts before adjusting entries have been prepared:An analysis of the
Brian Brunn, D.D.S., opened an incorporated dental practice on January 1, 2001.During the first month of operations the following transactions occurred:1. Performed services for patients who had
The trial balance for Sierra Corporation is shown in Illustration 4-4. In lieu of the adjusting entries shown in the text at October 31, assume the following adjustment data:1. Advertising supplies
The income statement of Garstka Co. for the month of July shows net income of$1,400 based on Service Revenue $5,500; Wages Expense $2,300; Supplies Expense $1,200;and Utilities Expense $600. In
This is a partial adjusted trial balance of Kaffen Company:Instructions Answer these questions, assuming the year begins January 1: (a) If the amount in Supplies Expense is the January 31 adjusting
Selected accounts of Snowmass Company are shown here:Instructions After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries that were made on July 31. [Hint:
The trial balances shown below are before and after adjustment for Digital Company at the end of its fiscal year:Instructions Prepare the adjusting entries that were made. DIGITAL COMPANY Trial
The adjusted trial balance for Digital Company is given in E4-11.from adjusted trial balance. : (SO 6) Instructions ‘Prepare the income and retained earnings statements for the year and the balance
The adjusted trial balance for Digital Company is given in E4-11. (SO 7) Instructions Prepare the closing entries for the temporary accounts at December 31.
Presented below are the assumptions, principles, and constraints used in this Identify accounting and previous chapters.assumptions, principles, and 1. Economic entity assumption. 6. Revenue
Han Solo started his own consulting firm, Solo Company, on June 1, 2001. The post to ledger accounts, and trial balance at June 30 is as follows:In addition to those accounts listed on the trial

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