In its annual reports, Kellog Company has indicated that plachty of its opera ing results with penting principles that emphasize profit-rich, sustainable sales growth, as well as cash continued investment during a multi-year period demonstrates the strength and flexibility of its business 3-72 CHAPTER 3 The Accounting Information System Instructions Compute the percentage change in sales, operating profit, net cash flow in capital expenditures and net earnings from year to year for the years presented b. Evaluate Kellogg's performance. Which trend seems most favorable? Which wend woems last favorable? What are the implications of these trends for Kellogg's sustainable performance objec Accounting, Analysis, and Principles The Amate Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loun. The accounts listed below appeared in the December 31, 2020, trial balance Credit Debit $ 6,000 192,000 Prepaid Advertising Equipment Accumulated Depreciation Equipment Notes Puyable Uneared Service Revenue Ticket Revenue Advertising Expense Salaries and Wages Expense Interest Expense $ 60,0CD 90,000 17.500 300,000 18,680 67,500 1,400 Additional information is available as follows. 1. The equipment has an estimated useful life of 16 years and a salvage value of $40,000 at the end of that time. Amato uses the straight-line method for depreciation. 2. The note payable is a one-year note given to the bank January 31 and bearing interest at 10s. Interest is calculated on a monthly basis. 3. Late in December 2020, the theater sold 350 coupon ticket books at $50 each. Two hundred of these ticket books have been used by year-end. The cash received was recorded as Uneared Service Revenue. 4. Advertising paid in advance was $6,000 and was debited to Prepaid Advertising. The company has used $2.500 of the advertising as of December 31, 2020 5. Salaries and wages accrued but unpaid at December 1, 2020, were $3,500. Accounting Prepare any adjusting journal entries necessary for the year ended December 31, 2020 Analysis Determine Amato's income before and after recording the adjusting entries. Use your analysis to explain why Amato's bankers should be willing to wait for Amato to complete its year end adjustment process before making a decision on the loan renewal. Principles Although Amato's bankers are willing to wait for the adjustment process to be completed before they receive financial information, they would like to receive financial reports more frequently than annually or even quarterly. What trade-offs, in terms of relevance and faithful representation, are inherent in pre- paring financial statements for shorter accounting time periods? In its annual reports, Kellog Company has indicated that plachty of its opera ing results with penting principles that emphasize profit-rich, sustainable sales growth, as well as cash continued investment during a multi-year period demonstrates the strength and flexibility of its business 3-72 CHAPTER 3 The Accounting Information System Instructions Compute the percentage change in sales, operating profit, net cash flow in capital expenditures and net earnings from year to year for the years presented b. Evaluate Kellogg's performance. Which trend seems most favorable? Which wend woems last favorable? What are the implications of these trends for Kellogg's sustainable performance objec Accounting, Analysis, and Principles The Amate Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loun. The accounts listed below appeared in the December 31, 2020, trial balance Credit Debit $ 6,000 192,000 Prepaid Advertising Equipment Accumulated Depreciation Equipment Notes Puyable Uneared Service Revenue Ticket Revenue Advertising Expense Salaries and Wages Expense Interest Expense $ 60,0CD 90,000 17.500 300,000 18,680 67,500 1,400 Additional information is available as follows. 1. The equipment has an estimated useful life of 16 years and a salvage value of $40,000 at the end of that time. Amato uses the straight-line method for depreciation. 2. The note payable is a one-year note given to the bank January 31 and bearing interest at 10s. Interest is calculated on a monthly basis. 3. Late in December 2020, the theater sold 350 coupon ticket books at $50 each. Two hundred of these ticket books have been used by year-end. The cash received was recorded as Uneared Service Revenue. 4. Advertising paid in advance was $6,000 and was debited to Prepaid Advertising. The company has used $2.500 of the advertising as of December 31, 2020 5. Salaries and wages accrued but unpaid at December 1, 2020, were $3,500. Accounting Prepare any adjusting journal entries necessary for the year ended December 31, 2020 Analysis Determine Amato's income before and after recording the adjusting entries. Use your analysis to explain why Amato's bankers should be willing to wait for Amato to complete its year end adjustment process before making a decision on the loan renewal. Principles Although Amato's bankers are willing to wait for the adjustment process to be completed before they receive financial information, they would like to receive financial reports more frequently than annually or even quarterly. What trade-offs, in terms of relevance and faithful representation, are inherent in pre- paring financial statements for shorter accounting time periods
