Questions and Answers of Fundamental Financial Accounting Concepts 11th Edition

The comparative financial statements prepared at December 31 for Tiger Audio showed the following summarized data:Required:1. Complete the two final columns shown beside each item in Tiger Audio’s
A condensed income statement for Simultech Corporation and a partially completed vertical analysis are presented below.Required:1. Complete the vertical analysis by computing each line item ( a )–(
A condensed balance sheet for Simultech Corporation and a partially completed vertical analysis are presented below.Required:1. Complete the vertical analysis by computing each line item ( a )–( d
You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have follows. The word high refers to the top third of the industry; average is the
Use the information in E13-3 to complete the following requirements.Required:1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change from 2012 to
A consumer products company reported a 25 percent increase in sales from last year to this year. Sales last year were $200,000. This year, the company reported Cost of Goods Sold in the amount of
Refer to the calculations from M13-2. Which of the ratios from Exhibit 13.5 have been included in these calculations? Have these two ratios improved or deteriorated in the current year compared to
Refer to the calculations from M13-1. What are the two most significant year-over-year changes in terms of dollars and in terms of percentages? Give one potential cause of each of these changes.Data
Refer to M13-1. Perform the calculations needed for vertical analyses. Round percentages to one decimal place.Data From M13-1:
Using the following income statements, perform the calculations needed for horizontal analyses. Round percentages to one decimal place.
Which of the following would not directly change the receivables turnover ratio for a company?a. Increases in the selling prices of your inventory.b. A change in your credit policy.c. Increases in
Explain whether the following situations, taken independently, would be favorable or unfavorable:(a) increase in gross profit percentage,(b) decrease in inventory turnover ratio,(c) increase in
Change the amounts for selected balance sheet accounts in the spreadsheets created for either S12-7 to calculate the net cash flows from operating activities if, just before the current year-end, the
Refer to the information presented in S12-7.Required:Complete the same requirements, except use the direct method only.Data From S12-7:You’ve recently been hired by B2B Consultants to provide
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.Required:1. Which of the two
Refer to PB12-4.Required:Complete requirements 1 and 2 using the direct method.Data From PB12-4:Dive In Company was started several years ago by two diving instructors. The company’s comparative
Refer to the information in PB12-2.Required:Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.Data From PB12-2:The income statement and
The income statement and selected balance sheet information for Calendars Incorporated for the year ended December 31 is presented below.Required:Prepare the cash flows from operating activities
Assume the same facts as PA12-4, except for the income statement and additional data item (a). The new income statement is shown on the following page. Instead of item (a) from PA12-4, assume that
Refer to PA12-4.Required:Complete requirements 1 and 2 using the direct method.Data From PA12-4:Heads Up Company was started several years ago by two hockey instructors. The company’s comparative
Heads Up Company was started several years ago by two hockey instructors. The company’s comparative balance sheets and income statement follow, along with additional information.Additional Data:a.
XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below.Required:Prepare the cash flows from operating activities
Hunter Company is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and
Golf Universe is a regional and online golf equipment retailer. The company reported the following for the current year:• Purchased a long-term investment for cash, $15,000.• Paid cash dividend,
Refer back to the information given for E12-10, plus the following summarized income statement for Pizza International, Inc. (in millions):Required:1. Based on this information, compute cash flow
New Vision Company completed its income statement and balance sheet and provided the following information:Required:1. Present the operating activities section of the statement of cash flows for New
Suppose the income statement for Goggle Company reports $95 of net income, after deducting depreciation of $35. The company bought equipment costing $60 and obtained a long-term bank loan for $70.
Refer to the two cases presented in M12-5, and for each case show the cash flow from operating activities section of the Year 2 statement of cash flows using the direct method.Data From M12-5:For
For each of the following independent cases, compute cash flows from operating activities using the direct method. Assume the list below includes all items relevant to operating activities.
Prestige Manufacturing Corporation reports the following items in its statement of cash flows presented using the direct method. Indicate whether each item is disclosed in the operating activities
Using the data from M12-6, calculate the maximum investing cash inflows that could be reported under IFRS. Using data from M12-7, calculate the maximum financing cash flows that could be reported
For the following two independent cases, show the cash flows from operating activities section of the statement of cash flows for year 2 using the indirect method.
Based on the cash flows shown, classify each of the following cases as a growing start-up company (S), a healthy established company (E), or an established company facing financial difficulties (F).
Which of the following is not added when computing cash flows from operations using the indirect method?a. The net increase in accounts payable.b. The net decrease in accounts receivable.c. The net
Which of the following items would not appear in the financing section of the statement of cash flows?a. The issuance of the company’s own stock.b. The repayment of debt.c. The payment of
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.Required:1. As of February 2,
What is the difference between cumulative and noncumulative preferred stock?
Many retired people invest a significant portion of their money in bonds of corporations because of their relatively low level of risk. During the 1980s, significant inflation caused some interest
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Assume that Warnaco Group Inc., the makers of Calvin Klein underwear, borrowed $100,000 from the bank to be repaid over the next five years, with principal payments beginning next month. Which of the
As of February 28, American Greetings Corporation had 7,400 full-time and 17,400 part-time employees. Assume that in the last pay period of the year, the company paid $8,000,000 to employees after
This case is based on a cost capitalization fraud at WorldCom. The case is available online in the Connect library. To complete this case, you will identify information that suggests certain costs
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Amazon, Google, and LinkedIn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
FedEx Corporation reported its balance sheet at May 31, 2013. Assume the following alphabetically listed accounts were included in its trial balance immediately prior to preparing the financial
The following transactions took place for Smart Solutions Inc.Required:Prepare the journal entries that Smart Solutions Inc. would record for the above transactions.
In 2013, Coca-Cola had a receivables turnover ratio of 9.3. Which of the following actions could Coca-Cola take to cause the ratio to increase?a. Pursue collections more aggressively.b. Increase the
If a 10 percent note receivable for $10,000 is created on January 1, 2015, and it has a maturity date of December 31, 2018,a. No interest revenue will be recorded in 2015.b. The note receivable will
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Which of the following regarding the lower of cost or market rule for inventory are true?(i) The lower of cost or market rule is an example of the historical cost principle.(ii) When the market value
Which of the following statements are true regarding Cost of Goods Sold?(i) Cost of Goods Sold represents the costs that a company incurred to purchase or produce inventory in the current period.(ii)
As a team, select an industry to analyze. Using your web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
A $1,000 sale is made on May 1 with terms 2/10, n/30. Items with a $100 selling price are returned on May 3. What amount, if received on May 9, will be considered payment in full?a. $700b. $800c.
Which of the following is not a component of Net Sales?a. Sales Returns and Allowancesb. Sales Discountsc. Cost of Goods Soldd. Sales Revenue
Sales discounts with terms 2/10, n/30 meana. 10 percent discount for payment received within 30 days of the date of sale.b. 2 percent discount for payment received within 10 days or the full amount
Which of the following accounts would normally have a debit balance?a. Inventoryb. Sales Returns and Allowancesc. Sales Discountsd. All of the above
Access the Wiki Art Gallery (WAG) instructional case in Connect and read the case in sufficient depth to answer the following question.1. Which of the following statements uses the fraud triangle
As a team, select an industry to analyze. Using your Web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
As a team, select an industry to analyze. Using your Web browser, each team member should access the annual report or 10-K for one publicly traded company in the industry, with each member selecting
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library.Required:1. How much does the
Assume it is now December 31, 2015, and Nicole has just completed her first year of operations at Nicole’s Getaway Spa. After looking through her trial balance, she noticed that there are some
Refer to the financial statements of The Home Depot in Appendix A and Lowe’s in Appendix B at the end of this book, or download the annual reports from the Cases section of the Connect
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section of the Connect library.Required:1. How much did The
House of Tutors, Inc. (HTI) is a company that runs a tutoring service for high school and university students. The company reported the following amounts in its post-closing trial balance, prepared
Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2014. The annual reporting period ends December 31. The trial balance on January 1,
Drs. Glenn Feltham and Gary Entwistle began operations of their physical therapy clinic called Northland Physical Therapy on January 1, 2014. The annual reporting period ends December 31. The trial
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2013. The annual reporting period ends December 31. The trial balance on January 1,
RunHeavy Corporation (RHC) is a corporation that manages a local rock band. RHC was formed with an investment of $10,000 cash, paid in by the leader of the band on January 3 in exchange for common
Learn to Play, Inc. is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2015, follows along with information about selected accounts.Required:1.
Refer to PB4-2.Required:Indicate the accounting equation effects (amount and direction) of each adjusting journal entry. Use + for increase, − for decrease, and NE for no effect. Provide an
Regis Corporation operates hair salons under various brand names including Supercuts, Mia & Maxx, and Style America. The following is a simplified list of accounts and amounts (in millions)
Val’s Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2015, follows along with information about selected accounts.Required:1. Calculate the (preliminary)
Refer to PA4-2.Required:Indicate the accounting equation effects (amount and direction) of each adjusting journal entry. Use 1 for increase, 2 for decrease, and NE for no effect. Provide an
Brokeback Towing Company is at the end of its accounting year, December 31, 2015. The following data that must be considered were developed from the company’s records and related documents:a. On
Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit
Golf Academy, Inc., provides private golf lessons. Its unadjusted trial balance at December 31, 2015, follows, along with information about selected accounts.Required:1. Calculate the (preliminary)
Refer to CP4-2.Required:Indicate the effects (account, amount, and direction) of each adjusting journal entry. Use 1 for increase, − for decrease, and NE for no effect. Provide an appropriate
Jordan Company’s annual accounting year ends on December 31. It is now December 31, 2015, and all of the 2015 entries have been made except for the following:a. The company owes interest of $700 on
The following is a list of accounts and amounts reported for Rollcom, Inc., for the fiscal year ended September 30, 2015. The accounts have normal debit or credit balances.Required:1. Prepare an
The following relates to a magazine company called My Style Mag (MSM). You will use your understanding of the relationships among (1) business activities, (2) accounting equation effects, (3) journal
Refer to E4-16.Required:Using the adjusted balances in E4-16, give the closing journal entry for the year ended December 31.Data From Exercise 4-16:Mint Cleaning Inc. prepared the following
Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31.Other data not yet recorded at December 31:a. Insurance expired
North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31.Other data not yet recorded at December 31:a. Rent expired during the year,
Dyer, Inc., completed its first year of operations on December 31, 2015. Because this is the end of the annual accounting period, the company bookkeeper prepared the following preliminary income
On December 31, 2015, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect
The adjusted trial balance for Rowdy Profits Corporation reports that its equipment had cost $250,000. For the current year, the company has recorded $30,000 of depreciation, which brings the total
Refer to E4-6.Required:Prepare adjusting journal entries at December 31, 2015, for (a) insurance and (b) supplies.Data From Exercise 4-6:Fes Company is making adjusting journal entries for the year
Refer to E4-8.Required:For each of the transactions in E4-8, indicate the amount and direction of effects of the adjusting journal entry on the elements of the accounting equation. Using the
Jaworski’s Ski Store is completing the accounting process for its first year ended December 31, 2015. The transactions during 2015 have been journalized and posted. The following data are available
Refer to E4-6.Required:Prepare adjusting journal entries at December 31, 2015, for (a) insurance and (b) supplies.Data From Exercise 4-6:Fes Company is making adjusting journal entries for the year
Fes Company is making adjusting journal entries for the year ended December 31, 2015. In developing information for the adjusting journal entries, you learned the following:a. A two-year insurance
Gibson Company’s adjusted balances at December 31, 2015 (listed alphabetically) were:Gibson prepared, but did not yet post, additional adjusting journal entries (AJEs) for $3,000 of depreciation
When a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded?a. Accrued Liabilityb. Accounts Receivablec.
Which of the following accounts would not appear in a closing journal entry?a. Interest Revenueb. Accumulated Depreciationc. Retained Earningsd. Salaries and Wages Expense
What is the purpose of closing journal entries?
What is a contra-asset? Give an example of one.

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