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CHAPTER 2 The Balance Sheet 81 STUDY QUESTIONS AND PROBLEMS 21. What information is provided in a balance 22. How is a common si balance sheet created 21 Discuss how marketable securities are vald on the balance sheet. 24. How can the allowance for doubtful be used to earning quality? Why is the valuation of inventores important in financial sporting 26. Why would a company switch to the LIROmed intory valuation in an inflation ay period? 27. Which inventory valuation method. FIFO OURO, will generally produce an ending inventory value on the balance sheet that is cost current cost? 28 Discuss the difference between the straight line method of depreciation and the scorer ated methods. Why do companies use different depreciation methods for tax reporting and financial reporting? 2.9. What is the purpose of listing the account Commitments and continories on the bal ance sheet even though no dollar amounts appear? 2.10. How is it possible for a company with positive retained earnings to be unable to pay a cash dividend? 2.11. The King Corporation has total annual revenue of $800.000 expenses other than depre ciation of $350,000; depreciation expense of $200,000 for tax purposes and depreciation expense of $130,000 for reporting purposes. The tax rate is 34%. Calculate net income for reporting purposes and for tax purposes. What is the deferred tax liability? 2.12. Explain how treasury stock affects the stockholders' equity section of the balance sheet and the calculation of earnings per share. 2.13. Using the following amounts in thousands) reported in Zebra Technologies consolidated balance sheets and statements of income at December 31, 2013 and 2012, and the valus tion schedule, analyze the accounts receivable and allowance accounts for all years. 2013 2012 $1,038,159 9996,168 Net Sales Accounts receivable, net of allowances for doubtful accounts of $453 in 2013 and 5669 in 2012 $ 176,917 $168,732 Schedule II-Valuation and Qualifying Accounts Years Ended December 31, 2013 and 2012 Balance at Beginning of Period Charged to Costs and Expenses Balance at End of Period Deductions 2013 Allowance for $ 669 5373 $589 $ 453 doubtful accounts 2012 Allowance for $1,560 $ 0 $891 669 doubtful accounts 2011 Allowance for $1,459 $343 5242 $1,560 doubtful accounts Extracted from 10-K fines for Zebra Technologies 2013. Obtained from US Securities and Exchange Commission www.sec.go. in the last com 82 CHAPTER 2 The Balese Slover 2.14 Tucker's Technology had the following goods available for sale period 100 units 55 140 units @57 200 unitsess 160 units 5 8.50 Beginning inventory Purchases in order from first to last nits. Sales for the period wees the end of the account Compute the inventory balance and the cost of goods sold at the end of the ing period using average cost. FIFO and LIRO. h) Which method shows the highest ending inventory? Id Which method shows the highest cost of goods sold? d) Explain why ending inventory and cost of goods sold ditter under the three meth 2.15. The FLAC Corporation sells a single product. The following is information on invento purchase, and sales for the current year Number of Units Sale Price Unit Cost $3.00 3.50 $5.00 Tanuary 1 January 10 January 1-March 31 April 25 April 1-June 30 July 10 July 1-September 30 October 15 October 1-December 31 Inventory Purchase Sales Purchase Sales Purchase Sales Purchase Sales 10,000 4.000 8.000 10,000 11.000 6.000 3.000 8.000 5.50 6.00 9.00 6.50 (a) Compute the inventory balance and the cost of goods sold expense ported at the end of the year using the following methods FIFO, LIFO, and average cost (b) Discuss the effect of each method on the balance sheet and income statement during periods of inflation 2.16. The following information is available for Chemco lac's inventories as of June 30, 2015 in Thousands) Finished goods Work in process Raw materials and supplies Inventories at curent cost Less LIFO valuation Total investories 2015 $382.925 76,524 72.246 531,695 2014 $303,249 60,588 49,814 413,681 188,365) $325,313 5447,856 We used the LIFO method of valuing our inventories for approximately 40% and 44% of total inventories at June 30, 2015 and 2014, respectively. (a) What method of inventory is used for the other 60% and 56% of total inventories? (b) Explain the meaning of each of the numbers listed in the table. R 2010 21/le/content/42790/Home Texas A&M Univers... G Google Lecture Web Page 0 0 Chapter 2, Part 1 Homework 2 Quiz Due February 21 at 11:59 PM Starts Feb 3, 2020 12:00 AM Ends Feb 21, 2020 11:59 PM Complete the following using the information from the Study Questions and Problems at the end of Chapter 2, on pages 81 - 83 as indicated below: 0 Question 2.13 - Using the information provided in the problem on page 81, calculate/answer the following: 0 a. Percentage change in net sales from 2012 to 2013 0 b. Percentage change in accounts receivable, net of allowance for doubtful accounts, from 2012 to 2013. c. Percentage change in allowance for doubtful accounts from 2012 to 2013 d. Answer the multiple choice question regarding the analysis of the information derived in parts a 0 e. Allowance account as a percentage of accounts receivable for 2012 f. Allowance account as a percentage of accounts receivable for 2013 0 and to 8. Answer the multiple-choice question for the answers derived in parts Question 2.14 Using the information provided in the problem on page 82 calculate answer the following questions: 0
