Details about a company’s cash flows appear in a number of places in the annual report. Use Target Corporation’s Fiscal 2015 Annual Report to answer the following questions. Visit http://www.pearsonhighered.com/Horngren to view a link to Target Corporation’s Fiscal 2015 Annual Report. Requirements: 1. Which method does Target use to report net cash flows from operating activities? How can you tell? 2. Target earned net income during 2015. Did operations provide cash or use cash during 2015? Give the amount. How did net cash provided by (used for) operations during 2015 compare with net income in 2015? 3. For the year ended January 30, 2016 (fiscal year 2015), did Target pay cash dividends? If so, how much? 4. For the year ended January 30, 2016, did Target use cash to purchase property, plant, and equipment? If so, how much?
> Refer to the data presented for Mulberry Designs, Inc. in Exercise E15-13. Exercise E15-13.: Data for Mulberry Designs, Inc. follow: Requirements: 1. Prepare a comparative common-size income statement for Mulberry Designs, Inc. using the 2018 and 201
> Theta Designs, Inc. has the following data: Perform a vertical analysis of Theta Designs’ balance sheet for each year. THETA DESIGNS, INC. Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Assets Total Current Assets
> Data for Mulberry Designs, Inc. follow: Requirements: 1. Prepare a horizontal analysis of the comparative income statement of Mulberry Designs, Inc. Round percentage changes to one decimal place. 2. Why did 2018 net income increase by a higher percenta
> The following data are adapted from the financial statements of Bridget’s Shops, Inc.: Total Current Assets ………………………….…………………………..$ 1,216,000 Accumulated Depreciation ……………………………..………….……2,000,000 Total Liabilities ………………………………………………………..………1,540,000 P
> Grand Oaks Realty’s net revenue and net income for the following five-year period, using 2015 as the base year, follow: Requirements: 1. Compute a trend analysis for net revenue and net income. Round to the nearest full percent. 2. Wh
> Describe the three basic types of cash flow activities.
> Ross’s Lipstick Company’s long-term debt agreements make certain demands on the business. For example, Ross may not purchase treasury stock in excess of the balance of retained earnings. Also, long-term debt may not exceed stockholders’ equity, and the c
> Lance Berkman is the controller of Saturn, a dance club whose year-end is December 31. Berkman prepares checks for suppliers in December, makes the proper journal entries, and posts them to the appropriate accounts in that month. However, he holds on to
> The company wants to invest some of its excess cash in trading securities and is considering two investments, The Paddle Company (PC) and Recreational Life Vests (RLV). The income statement, balance sheet, and other data for both companies follow for 201
> Amazon.com, Inc. serves its customers through its retail Web sites, selling millions of unique products. In addition, the company manufactures and sells electronic devices including Kindle e-readers and Fire tablets. Amazon.com also offers Amazon Prime,
> Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities. Short Exercise S14A-12: Amy’s Learning Center has assem
> Amy’s Learning Center has assembled the following data for the year ended June 30, 2018: Payments to suppliers ……………………….…………………….…………………………$ 115,000 Cash payment for purchase of equipment ………………………………………………39,000 Payments to employees ……………………………………………
> Jelly Bean, Inc. began 2018 with cash of $58,000. During the year, Jelly Bean earned revenue of $595,000 and collected $614,000 from customers. Expenses for the year totaled $427,000, of which Jelly Bean paid $212,000 in cash to suppliers and $205,000 in
> Jennifer’s Wedding Shops earned net income of $27,000, which included depreciation of $16,000. Jennifer’s acquired a $119,000 building by borrowing $119,000 on a longterm note payable. Requirements: 1. How much did Jennifer’s cash balance increase or de
> Use the Preston Media Corporation data in Short Exercise S14-7 and the results you calculated from the requirements. Prepare Preston Media’s statement of cash flows— indirect method—for the year ended
> Use the data in Short Exercise S14-5 to complete this exercise. Prepare Winding Road Cellular’s statement of cash flows using the indirect method for the year ended April 30, 2018. Assume beginning and ending Cash are $48,000 and $52,20
> How does the statement of cash flows help users of financial statements?
> Winding Road Cellular accountants have assembled the following data for the year ended April 30, 2018: Prepare the operating activities section using the indirect method for Winding Road Cellular’s statement of cash flows for the year
> DVR Equipment, Inc. reported the following data for 2018: Income Statement: Net Income ………………………………………….………………………………………..$ 43,000 Depreciation Expense …………………………………………………………………………6,000 Balance Sheet: Increase in Accounts Receivable ………………………………………………………
> Financial statements all have a goal. The statement of cash flows does as well. Describe how the statement of cash flows helps investors and creditors perform each of the following functions: a. Predict future cash flows. b. Evaluate management decision
> Red Toy Company reported the following comparative balance sheet: Requirements: 1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled $134,000. 2. Compute the payments for inventory during 2018. Cost of Goods
> Companies can use a spreadsheet to complete the statement of cash flows. Each item that follows is recorded in the transaction analysis columns of the spreadsheet. a. Net income b. Increases in current assets (other than Cash) c. Decreases in current li
> Julie Lopez Company expects the following for 2018: • Net cash provided by operating activities of $148,000. • Net cash provided by financing activities of $56,000. • Net cash used for investing activities of $77,000 (no sales of long-term assets). • Cas
> Preston Media Corporation had the following income statement and balance sheet for 2018: Requirements: 1. Compute the acquisition of plant assets for Preston Media Corporation during 2018. The business sold no plant assets during the year. Assume the
> Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement: a. Increase in accounts payable b. Payment of dividends c. Decrease in accrued liabiliti
> Cash flow items must be categorized into one of four categories. Identify each item as operating (O), investing (I), financing (F), or non-cash (N). a. Cash purchase of merchandise inventory b. Cash payment of dividends c. Cash receipt from the collecti
> Explain why depreciation expense, depletion expense, and amortization expense are added to net income in the operating activities section of the statement of cash flows when using the indirect method.
> What does the statement of cash flows report?
> Describe the five steps used to prepare the statement of cash flows by the indirect method.
> Describe the two formats for reporting operating activities on the statement of cash flows.
> Canyon Canoe Company’s comparative balance sheet is shown below. 2019 amounts are assumed, but include several transactions from prior chapters. Additional data follow: 1. The income statement for 2019 included the following items: a.
> Why might a spreadsheet be helpful when completing the statement of cash flows?
> The 2018 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro disposed of a plant asset at book value in 2018. Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activitie
> Use the Sweet Valley data from Problem P14-41B. Problem P14-41B.: The 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow: Additionally, Sweet Valley purchased land of $20,900 by financing it 100% with longterm notes paya
> Diversion Rare Coins (DRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, DRC issued no par common stock for $450,000. b. Early in January, DRC made the following cash payments: 1. For store fixtures, $46,000
> The comparative balance sheet of Robeson Educational Supply at December 31, 2018, reported the following: Robeson’s transactions during 2018 included the following: Requirements: 1. Prepare the statement of cash flows of Robeson Edu
> The 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow: Additionally, Sweet Valley purchased land of $20,900 by financing it 100% with longterm notes payable during 2018. During the year, there were no sales of land, no re
> Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Benson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financ
> What types of transactions are reported in the non-cash investing and financing activities section of the statement of cash flows?
> Classic Rare Coins (CRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, CRC issued no par common stock for $525,000. b. Early in January, CRC made the following cash payments: 1. For store fixtures, $51,000 2.
> The 2018 comparative balance sheet and income statement of Appleton Group, Inc. follow. Appleton disposed of a plant asset at book value during 2018. Prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activ
> Use the Rolling Hills, Inc. data from Problem P14-34A. Problem P14-34A: The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow: Additionally, Rolling Hills purchased land of $21,100 by financing it 100% with longterm n
> Boundary Rare Coins (BRC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, BRC issued no par common stock for $475,000. b. Early in January, BRC made the following cash payments: 1. For store fixtures, $53,000 2
> The comparative balance sheet of Jackson Educational Supply at December 31, 2018, reported the following: Jackson’s transactions during 2018 included the following: Requirements: 1. Prepare the statement of cash flows of Jackson Edu
> The 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow: Additionally, Rolling Hills purchased land of $21,100 by financing it 100% with longterm notes payable during 2018. During the year, there were no sales of land, no
> Accountants for Morganson, Inc. have assembled the following data for the year ended December 31, 2018: Prepare Morganson’s statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and
> American Rare Coins (ARC) was formed on January 1, 2018. Additional data for the year follow: a. On January 1, 2018, ARC issued no par common stock for $450,000. b. Early in January, ARC made the following cash payments: 1. For store fixtures, $53,000 2
> Use the Boost Plus, Inc. data in Exercise E14-21 to prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method.
> A-One Mobile Homes reported the following in its financial statements for the year ended December 31, 2018: Requirements: 1. Compute the collections from customers. 2. Compute payments for merchandise inventory. 3. Compute payments of other operating e
> Consider the following facts: a. Beginning and ending Accounts Receivable are $24,000 and $20,000, respectively. Credit sales for the period total $68,000. b. Cost of goods sold is $77,000. c. Beginning Merchandise Inventory balance is $29,000, and endin
> The income statement and additional data of Value Corporation follow: a. Collections from customers are $13,000 more than sales. b. Dividend revenue, interest expense, and income tax expense equal their cash amounts. c. Payments to suppliers are the su
> The accounting records of Four Seasons Parts reveal the following: Compute cash flows from operating activities using the direct method for the year ended December 31, 2018. Payment of salaries and wages $ 34,000 Net income $ 21,000 Depreciation ex
> Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plans to purchase a truck for $23,000 and a forklift for $125,000 next year. In addition, it plans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019
> Dirt bikes, Inc. identified the following selected transactions that occurred during the year ended December 31, 2018: a. Issued 750 shares of $3 par common stock for cash of $17,000. b. Issued 5,100 shares of $3 par common stock for a building with a f
> Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company’s statement of cash flows—indirect method—for the year ended December 31, 2018. Assume investments are purchased with cash
> Rouse Exercise Equipment, Inc. reported the following financial statements for 2018: Requirements: 1. Compute the amount of Rouse Exercise’s acquisition of plant assets. Assume the acquisition was for cash. Rouse Exercise disposed of
> Consider the following facts for Java Jolt: a. Beginning and ending Retained Earnings are $45,000 and $70,000, respectively. Net income for the period is $60,000. b. Beginning and ending Plant Assets are $124,500 and $134,500, respectively. c. Beginning
> The income statement of Boost Plus, Inc. follows: Additional data follow: a. Acquisition of plant assets is $124,000. Of this amount, $108,000 is paid in cash and $16,000 by signing a note payable. b. Cash receipt from sale of land totals $20,000. Ther
> The accounting records of CD Sales, Inc. include the following accounts: Compute CD’s net cash provided by (used for) operating activities during July 2018. Use the indirect method. Account Beginning Balance Ending Balance Cash $
> Moss Exports is having a bad year. Net income is only $60,000. Also, two important overseas customers are falling behind in their payments to Moss, and Moss’s accounts receivable are ballooning. The company desperately needs a loan. The Moss Exports Boar
> The records of Vintage Color Engraving reveal the following: Compute cash flows from operating activities by the indirect method for year ended December 31, 2018. $ 36,000 Depreciation expense $ 5,000 Net income Sales revenue 53,000 Decrease in cur
> The statement of cash flows categorizes like transactions for optimal reporting. Identify each item as a (n): • Operating activity—addition to net income (O+) or subtraction from net income (O-) • Investing activity—cash inflow (I+) or cash outflow (I-)
> Consider the following transactions: Identify the category of the statement of cash flows, indirect method, in which each transaction would be reported. Date Accounts and Explanation Debit Credit a. Cash 72,000 Common Stock 72,000 b. Treasury Stock
> Consider the following transactions: a. Purchased equipment for $130,000 cash. b. Issued $14 par preferred stock for cash. c. Cash received from sales to customers of $35,000. d. Cash paid to vendors, $17,000. e. Sold building for $19,000 gain for cash.
> How does the direct method differ from the indirect method when preparing the operating activities section of the statement of cash flows?
> What is free cash flow, and how is it calculated?
> What should the net change in cash section of the statement of cash flows always reconcile with?
> What accounts on the balance sheet must be evaluated when completing the financing activities section of the statement of cash flows?
> Old Mills’s income statement appears as follows (amounts in thousands): Use the following ratio data to complete Old Mills’s income statement: 1. Inventory turnover is 3.70 (beginning Merchandise Inventory was $810;
> Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requirements: 1. Compute earnings per share (EPS) for 2018 for
> Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requirements: 1. Compute the profit margin ratio for Accel&acir
> Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requirements: 1. Compute the debt ratio and the debt to equity
> Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requirements: 1. Compute the inventory turnover, daysâ
> Caleb King is interested in investing in Orange Corporation. What types of tools should Caleb use to evaluate the company?
> Traditional Mills’s balance sheet appears as follows (amounts in thousands): Use the following ratio data to complete Traditional Mills’s balance sheet. 1. Current ratio is 0.72. 2. Acid-test ratio is 0.36. TRADI
> Accel’s Companies, a home improvement store chain, reported the following summarized figures: Accel’s has 10,000 common shares outstanding during 2018. Requirements: 1. Compute Accel’s Companies&ac
> Data for Connor, Inc. and Alto Corp. follow: Requirements: 1. Prepare common-size income statements. 2. Which company earns more net income? 3. Which company’s net income is a higher percentage of its net sales revenue? Connor Alt
> Great Value Optical Company reported the following amounts on its balance sheet at December 31, 2018 and 2017: Prepare a vertical analysis of Great Value’s assets for 2018 and 2017. 2018 2017 Cash and Receivables $ 80,640 $ 80,575
> What accounts on the balance sheet must be evaluated when completing the investing activities section of the statement of cash flows?
> Muscateer Corp. reported the following revenues and net income amounts: Requirements: 1. Calculate Muscateer’s trend analysis for revenues and net income. Use 2016 as the base year, and round to the nearest percent. 2. Which measure i
> Verifine Corp. reported the following on its comparative income statement: Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts and in percentages—for 2019 and 2018. (In millions) 201
> Briefly describe the ratios that can be used to evaluate a company’s stock as an investment.
> Briefly describe the ratios that can be used to evaluate a company’s profitability.
> Briefly describe the ratios that can be used to evaluate a company’s ability to pay longterm debt.
> Briefly describe the ratios that can be used to evaluate a company’s ability to sell merchandise inventory and collect receivables.
> Briefly describe the ratios that can be used to evaluate a company’s ability to pay current liabilities.
> What is vertical analysis? What item is used as the base for the income statement? What item is used as the base for the balance sheet?
> What is an annual report? Briefly describe the key parts of the annual report.
> What are some common red flags in financial statement analysis?
> If current liabilities increase, what is the effect on cash? What about a decrease in current liabilities?
> Theater by Design and Show Cinemas are asking you to recommend their stock to your clients. Because Theater by Design and Show Cinemas earn about the same net income and have similar financial positions, your decision depends on their statement of cash f
> What is separation of duties?
> What is internal control?
> The October 31 bank statement of Wyndham’s Healthcare has just arrived from State Bank. To prepare the bank reconciliation, you gather the following data: a. The October 31 bank balance is $6,290. b. The bank statement includes two cha
> The May cash records of Donald Insurance follow: Donald’s Cash account shows a balance of $17,750 at May 31. On May 31, Donald Insurance received the following bank statement: Additional data for the bank reconciliation follow: a. The
> Suppose that on September 1, Cool Gyrations, a disc jockey service, creates a petty cash fund with an imprest balance of $350. During September, Ruth Mangan, fund custodian, signs the following petty cash tickets: On September 30, prior to replenishmen
> On September 1, Party Salad Dressings creates a petty cash fund with an imprest balance of $600. During September, Michael Martell, the fund custodian, signs the following petty cash tickets: On September 30, prior to replenishment, the fund contains t
> Each of the following situations has an internal control weakness. a. Jade Applications has decided that one way to cut costs in the upcoming year is to fire the external auditor. The business believes that the internal auditor should be able to efficie
> Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry Chipello, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advices. Chipello forwards the checks to another employee, who make
> The August 31 bank statement of Well Healthcare has just arrived from United Bank. To prepare the bank reconciliation, you gather the following data: a. The August 31 bank balance is $4,540. b. The bank statement includes two charges for NSF checks from
