a. b. Prepare a written response to the following items. Save your response in a Word document or PDF file named YourLastName_W2 and upload the file to the Week 2 Activity assignment drop box on the Week 2 page in Blackboard by 11:59 PM on Monday, September 21, 2020. 1. Alex and Jane are partners in a small business; the total assets of the business are $400,000. The business has been sued by a customer; the customer is seeking damages of $750,000. Alex and Jane do not have insurance. What resources can be used to pay the customer $750,000 in the event the business is found liable? Why? 2. Use the attached balance sheet to answer the following questions. What is the largest source of long-term cash being used by the company? How will this source probably affect the company's use of cash on an ongoing basis? (4 points) What is the company's largest investment in short-term assets? Describe these types of assets. (4 points) For common stockholders, what is their amount of investment in the company? Why? (4 points) d. How much has the company invested in long-term assets? Why are these assets important for the company's success? (4 points) 3. Use the attached income statement to answer the following questions. How much did the company spend to create the goods and services it sold? (3 points) b. Does the company have debt? Why or why not? (4 points) How much income is available to common stockholders? (3 points) C. a. C. 2019 2018 FINANCIAL RESULTS (in millions) Sales (0) $77,130 982 $74,433 923 78,112 54,864 16,233 2,357 4,658 75,356 53,299 15,723 2,224 Other revenue Total revenue Cost of sales Selling, general and administrative expenses (SG&A) Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income Net interest expense (d) Net other (income) / expense le) Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings 4,110 461 477 (9) (27) 4,190 3,676 746 921 3,269 2,930 12 7 $3,281 $2,937 BALANCE SHEETS (In millions) (Unaudited) June 30, 2020 June 30, 2019 $13,576 122,951 136,527 $11,356 122,463 133,819 32,011 1,895 11,482 181,915 29,524 2,063 10,146 175,552 44,151 8,753 2,965 43,351 7,038 13,138 $301,311 36,477 7,379 2,649 42,026 7,750 14,723 $286,556 Assets Current assets: Cash and cash equivalents Short-term investments Total cash, cash equivalents, and short-term investments Accounts receivable, net of allowance for doubtful accounts of $788 and $411 Inventories Other current assets Total current assets Property and equipment, net of accumulated depreciation of $43,197 and $35,330 Operating lease right-of-use assets Equity investments Goodwill Intangible assets, net Other long-term assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Current portion of long-term debt Accrued compensation Short-term income taxes Short-term unearned revenue Other current liabilities Total current liabilities Long-term debt Long-term income taxes Long-term unearned revenue Deferred income taxes Operating lease liabilities Other long-term liabilities Total liabilities Commitments and contingencies Stockholders' equity: Common stock and paid-in capital - shares authorized 24,000; outstanding 7,571 and 7,643 Retained earnings Accumulated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity $12,530 3,749 7,874 2,130 36,000 10,027 72,310 59,578 29,432 3,180 204 7,671 10,632 183,007 $9,382 5,516 6,830 5,665 32,676 9,351 69.420 66,662 29,612 4,530 233 6,188 7,581 184,226 80,552 34,566 3,186 118,304 $301,311 78,520 24,150 (340) 102,330 $286,556 a. b. Prepare a written response to the following items. Save your response in a Word document or PDF file named YourLastName_W2 and upload the file to the Week 2 Activity assignment drop box on the Week 2 page in Blackboard by 11:59 PM on Monday, September 21, 2020. 1. Alex and Jane are partners in a small business; the total assets of the business are $400,000. The business has been sued by a customer; the customer is seeking damages of $750,000. Alex and Jane do not have insurance. What resources can be used to pay the customer $750,000 in the event the business is found liable? Why? 2. Use the attached balance sheet to answer the following questions. What is the largest source of long-term cash being used by the company? How will this source probably affect the company's use of cash on an ongoing basis? (4 points) What is the company's largest investment in short-term assets? Describe these types of assets. (4 points) For common stockholders, what is their amount of investment in the company? Why? (4 points) d. How much has the company invested in long-term assets? Why are these assets important for the company's success? (4 points) 3. Use the attached income statement to answer the following questions. How much did the company spend to create the goods and services it sold? (3 points) b. Does the company have debt? Why or why not? (4 points) How much income is available to common stockholders? (3 points) C. a. C. 2019 2018 FINANCIAL RESULTS (in millions) Sales (0) $77,130 982 $74,433 923 78,112 54,864 16,233 2,357 4,658 75,356 53,299 15,723 2,224 Other revenue Total revenue Cost of sales Selling, general and administrative expenses (SG&A) Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income Net interest expense (d) Net other (income) / expense le) Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings 4,110 461 477 (9) (27) 4,190 3,676 746 921 3,269 2,930 12 7 $3,281 $2,937 BALANCE SHEETS (In millions) (Unaudited) June 30, 2020 June 30, 2019 $13,576 122,951 136,527 $11,356 122,463 133,819 32,011 1,895 11,482 181,915 29,524 2,063 10,146 175,552 44,151 8,753 2,965 43,351 7,038 13,138 $301,311 36,477 7,379 2,649 42,026 7,750 14,723 $286,556 Assets Current assets: Cash and cash equivalents Short-term investments Total cash, cash equivalents, and short-term investments Accounts receivable, net of allowance for doubtful accounts of $788 and $411 Inventories Other current assets Total current assets Property and equipment, net of accumulated depreciation of $43,197 and $35,330 Operating lease right-of-use assets Equity investments Goodwill Intangible assets, net Other long-term assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Current portion of long-term debt Accrued compensation Short-term income taxes Short-term unearned revenue Other current liabilities Total current liabilities Long-term debt Long-term income taxes Long-term unearned revenue Deferred income taxes Operating lease liabilities Other long-term liabilities Total liabilities Commitments and contingencies Stockholders' equity: Common stock and paid-in capital - shares authorized 24,000; outstanding 7,571 and 7,643 Retained earnings Accumulated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity $12,530 3,749 7,874 2,130 36,000 10,027 72,310 59,578 29,432 3,180 204 7,671 10,632 183,007 $9,382 5,516 6,830 5,665 32,676 9,351 69.420 66,662 29,612 4,530 233 6,188 7,581 184,226 80,552 34,566 3,186 118,304 $301,311 78,520 24,150 (340) 102,330 $286,556